This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Wells Fargo, Citi Are Sued Over 'Discriminatory' Mortgage Practices (Update 1)

Stocks in this article: C WFC

Updated from 9:39 a.m. EST with Wells Fargo statement.

NEW YORK (TheStreet) -- Los Angeles City Attorney Mike Feuer is suing Citigroup (C) and Wells Fargo (WFC), alleging that the banks engaged in discriminatory mortgage lending practices that triggered a wave of foreclosures, hurting the city's tax revenue.

In complaints filed in U.S. federal court, the city alleged that Citi and Wells "... engaged in a continuous pattern and practice of mortgage discrimination in Los Angeles since at least 2004 by imposing different terms or conditions on a discriminatory and legally prohibited basis."

The city is seeking damages for lost tax revenue, the decrease in the value of homes in neighborhoods affected by foreclosures and the increased costs for city services due to foreclosures.

The complaint cited a report by the Alliance of Californians for Community Empowerment and the California Reinvestment Coalition which estimated that the mortgage crisis caused 200,000 foreclosures in Los Angeles and an estimated $78 billion decline in home values during 2008-2012.

The city is estimated to have lost about $481 million in property tax revenue over the period. The foreclosure crisis has also increased costs to local governments in terms of safety inspections, trash removal and maintenance. The report estimated the cost of the foreclosure crisis in Los Angeles at $1.2 billion.

Los Angelese alleged that the banks engaged in "red lining," the practice of denying credit to particular neighborhoods based on race, and "reverse red lining," the practice of targeting minority communities with predatory loans.

The suit cited confidential witness statements by former employees as part of its evidence.

"We believe this suit is without merit, and we are disappointed that the LA Attorney does not recognize our deep commitment to fair lending," Citigroup said in a statement. "Citi considers each applicant by the same objective criteria, which are blind to race, ethnicity, gender and any other prohibited basis. Using these objective criteria allows us to lend on terms that are consistent with the risk profile of each borrower and gives millions of qualifying consumers the opportunity to own a home."

Wells Fargo said it was disappointed by the lawsuit. "The accusations made by the City Attorney are baseless, do not in any way reflect our values as a company, and we will vigorously defend ourselves.  We will continue to focus on helping customers succeed financially and expanding homeownership in California and across the United States."

-- Written by Shanthi Bharatwaj in New York.

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 18,030.21 +6.04 0.03%
S&P 500 2,081.88 -0.29 -0.01%
NASDAQ 4,773.4720 +8.0480 0.17%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs