Wells Fargo, Bank of America, and Citigroup are the three latest banks against which the California city of Los Angeles has filed mortgage-lending discrimination suits. The prosecution alleges that discriminatory practices against minorities and dubious lending practices have been in effect since 2004, and has led to steep costs for the city.
The city’s goal is reportedly to try to recover tax revenue lost as a result of a wave of foreclosures — approximately 200,000 — that led to a loss of $78 billion in home values. While housing foreclosures can be the result of a wide array of market forces, the city claims that the aforementioned three banks committed predatory lending and engaged minority communities in loans they could not afford resulting in housing losses and increased need for city services.
On December 5, Los Angeles city attorney Mike Feuer said that the banks “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 consequential dwindling of the city’s property tax base have caused a property tax loss of $481 million, among other raised city service costs including affordable housing, safety services, and property maintenance.
All three banks have come forward with statements defending their actions and declaring Feuer’s words to be in error.