The Los Angeles city attorney has sued Wells Fargo and Citigroup alleging the companies engaged in mortgage discrimination that led to an increase of foreclosures in minority communities during the housing crash.
The city attorney’s suits allege a “continuing pattern of discriminatory mortgage lending practices” in Los Angeles that violates the federal Fair Housing Act. They claimed Wells Fargo and Citigroup at first refused to grant mortgages in minority neighborhoods- a practice known as redlining. Later, they targeted black and Hispanic neighborhoods for predatory loans, a practice known as reverse redlining.
The lawsuits contend that “vulnerable, undeserved borrowers” denied by years of redlining jumped at the chance to obtain subprime home loans they could not afford, then were hit with foreclosures when the housing bubble burst and they were denied refinancing.
Both lawsuits seek unspecified reparations and damages. A report by the Alliance of Californians for Community Empowerment and the California Reinvestment Coalition is cited in the lawsuit that estimated the mortgage crisis resulted in more than 200,000 foreclosures from 2008 to 2012, with $481 million in lost property tax revenue to the city, and $1.2 billion in Los Angeles for “increased costs of safety inspections, police and fire calls, trash removal and property maintenance.”
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