Citigroup Inc. (C:US) and Wells Fargo & Co. were accused of discriminatory mortgage lending by the city of Los Angeles, which seeks damages for reduced property tax revenue and the costs of maintaining foreclosed properties.
The city filed complaints against both banks yesterday in federal court in Los Angeles. Citigroup and Wells Fargo have been engaged in discriminatory lending to minority borrowers since at least 2004, which placed the borrowers in loans they couldn’t afford and caused a high number of foreclosures in minority neighborhoods, Los Angeles said.
The fact that the two banks’ foreclosures are so “disproportionately concentrated in minority neighborhoods is not the product of random events,” according to the complaints. It reflects and is fully consistent with the banks’ “practice of targeting minority neighborhoods and customers for discriminatory practices and predatory pricing and products.”
Homeowners in the second-largest U.S. city lost about $78.8 billion in home values as the result of 200,000 foreclosures from in 2008 through 2012, the city said, citing a report by Alliance of Californians for Community Empowerment and the California Reinvestment Coalition. The lost property tax revenue to the city has been $481 million, according to the complaints.
Liz Fogarty, a spokeswoman for New York-based Citigroup, said the lawsuit is without merit.
“Citi is proud of our efforts to make sure our lending standards are fair to all of our customers,” Fogarty said in an e-mailed statement. “Citi considers each applicant by the same objective criteria, which are blind to race, ethnicity, gender and any other prohibited basis.”
Tom Goyda, a spokesman for San Francisco-based Wells Fargo, said the accusations are baseless.
“Wells Fargo is deeply disappointed by the city attorney’s decision to file a meritless lawsuit rather than collaborate together to help borrowers and home owners in Los Angeles,” Goyda said in an e-mailed statement. “Wells Fargo has been a part of Southern California for over a century and we are proud of our record as a fair and responsible lender.”
The cases are City of Los Angeles v. Wells Fargo & Co. (WFC:US), 13-cv-09007, and City of Los Angeles v. Citigroup Inc., 13-cv-09009, U.S. District Court, Central District of California (Los Angeles).
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