Wells Fargo (WFC) secured a victory in court Friday, when a U.S. District Judge dismissed a lawsuit brought against the lender by Cook County, Illinois, which accused the bank of predatory lending.
According to a Reuters report, U.S. District Judge Gary Feinerman ruled in favor of Wells Fargo, which stood accused of “targeting tens of thousands of black, Hispanic and female borrowers through ‘equity stripping,’ where it imposed excessive or unnecessary rates and fees as well as refinancing penalties.”
From the Reuters report:
The county said this alleged misconduct boosted foreclosures, eroded property taxes, necessitated higher spending to combat blight, and caused at least $300 million of damages.
Steering minorities into costly loans is sometimes called "reverse redlining." Chicago is the third most populous U.S. city.
Feinerman said Cook County had constitutional standing to sue Wells Fargo, but could not pursue an FHA claim because it "alleges neither that it was denied a loan nor offered unfavorable terms – setting aside the obvious point that Cook County is not alleged to have a race or other protected trait."
The judge added that his decision did not mean or suggest that Wells Fargo did not violate the FHA or engage in reverse redlining, "or that the direct victims of Wells Fargo’s alleged misconduct do not deserve compensation."
