This week, a federal judge gave Cook County, Illinois, the green light to pursue part of its lawsuit against Wells Fargo, which accuses the big bank of predatory mortgage lending targeting black and Hispanic borrowers in the Chicago area.
According to a report from Reuters, U.S. District Judge Gary Feinerman narrowed the scope of the county’s suit. On Monday, Feinerman ruled that Cook County may pursue federal Fair Housing Act claims against Wells Fargo, to the extent the bank’s alleged “equity stripping” practices raised the cost of administering and processing a higher number of foreclosures but he dismissed the county's claims alleging harm from lost property taxes, the need to combat crime and blight, racial segregation and other factors, saying that they are “ripples” that “flow far beyond” the bank's alleged misconduct.
As Reuters reported, Feinerman pointed to a May 2017 decision by the Supreme Court that involved similar claims by the city of Miami against Wells and Bank of America. The decision allowed cities to pursue FHA claims so long as they could establish a “direct” link between the alleged misconduct and the resulting harm. Cook County now joins Sacramento and Philadelphia in seeking legal action against the bank.
The county’s lawsuit began back in November 2014 and accuses the bank of directing minority borrowers into loans were not able to afford, resulting in higher fees, defaults and foreclosures than white borrowers, and rewarding employees with bonuses for offering such loans, according to the Reuters report.
“While the court has allowed the lawsuit to proceed, we are encouraged by the fact that it has significantly limited the scope of the allowable claims,” Wells Fargo spokesman Tom Goyda said to Reuters. “We are prepared to defend our record as a fair and responsible lender.”
