Poor lending practices were just one of the many variables involved in the bursting of the housing bubble a few years ago, and in today’s post-crisis world, one would expect lenders to be much more precautious when it comes to making a loan. Unfortunately, not all lenders seem to be as careful as they should be – and in some cases are still abusing the system – which brings us to our story today: Wells Fargo is facing new accusations of predatory lending.
Just days ago, banking giant Wells Fargo & Co. made headlines again, the company now must face allegations of discriminatory lending practices in Los Angeles. This news comes just a couple weeks after a New York judge ruled that a document containing Wells Fargo’s “Home Mortgage Attorney Procedure Manual” would be admitted into evidence in a separate lawsuit – covered in our story “Wells Fargo Holds the Smoking Gun” – which claims that Wells Fargo used the document to falsely create evidence of ownership and precede with foreclosures when crucial documents were missing.
In the most recent court ruling, U.S. District Judge Otis Wright II in Los Angeles said the city’s allegations were legally sufficient to proceed with the case.
The city sued Wells Fargo – along with Citigroup Inc. and Bank of America Corp. – last year, saying the three mortgage lenders engaged in discriminatory practices since at least 2004, placing minority borrowers in loans they couldn’t afford and driving up the number of foreclosures in their neighborhoods.
If these accusations are found true, it would mean that Los Angeles homeowners have lost about $78.8 billion in home values as the result of 200,000 foreclosures from 2008 through 2012, and subsequently the city has lost $481 million in property tax revenue.
After hearing these newest accusations of predatory lending practices, would you still suggest Wells Fargo to your clients, or should agents and brokers steer their clients away?
Read the full story here: