Wells Fargo Faces Predatory Lending Charges
Cook County, Ill., is accusing Wells Fargo of making mortgages more expensive for black and Latino borrowers than whites.
Officials in Cook County, which includes Chicago, allege that the mortgage giant is taking part in predatory lending, and they’ve filed a complaint with the federal court in Chicago. Other municipal governments in Los Angeles and Miami have recently filed similar complaints.
Cook County officials say Wells Fargo has engaged in “equity stripping” with 26,000 loans, from origination to refinancing loans and foreclosures.
“Equity stripping is an abusive form of ‘asset-based lending’ that maximizes lender profits based on the value of the underlying asset and onerous loan terms, while disregarding a borrower’s ability to repay,” the complaint alleges.
County officials say the practice uses the bundling of mortgages to sell as securities and allows the lender to make a profit off the loans, even if they fall into foreclosure. Officials are seeking up to $300 million in damages, Bloomberg reports.
Wells Fargo officials call the accusations “baseless.”
“It’s disappointing they chose to pursue a lawsuit against Wells Fargo rather than collaborate together to help borrowers and home owners in the county,” says Tom Goyda, a spokesman for Wells Fargo. “We stand behind our record as a fair and responsible lender.”