Cook County, Illinois is suing Wells Fargo & Co. (WFC) for engaging in purportedly predatory and discriminatory lending practices in the Chicago area. The county said that the U.S. mortgage lending company targeted female, Hispanic, and black borrowers.
Per the mortgage lending lawsuit, for over a decade Wells Fargo discriminated against female and minority borrowers in the area to increase profits. Cook County claims that the bank went after borrowers from the time the loans were created through foreclosure and even during equity stripping, which included unnecessary or inflated fees and rates and refinancing penalties. The county believes its property tax base was eroded, it had to spend money to deal with abandoned properties, and some 26,000 borrowers were impacted. Cook County says damages could be as high as $300 million or greater.
It wants to stop Wells Fargo’s alleged practices and is seeking punitive and compensatory damages. Cook County also notes that certain practices involved the former Wachovia Corp, which Wells Fargo now owns. Meantime, the bank says that the accusations in the mortgage lending lawsuit have no merit.
Wells Fargo is not the only bank that Cook County has sued over mortgage lending. It also filed complaints against HSBC Holdings Plc. (HSBC) and Bank of America Corp. (BAC).
Meantime, in the wake of new guidelines recently issued by mortgage giants Freddie Mac (FMCC) and Fannie Mae (FNMA), some of the biggest mortgage lenders in the country are getting ready to relax standards for borrowers. The guidelines go into effect on December 1, 2014. According to The Wall Street Journal, this could allow hundreds of thousands of consumers who otherwise wouldn’t be able to obtain mortgages.
Lenders will likely broaden the scope of the kinds of borrowers that are able to qualify by lowering credit-score requirements and granting more flexibility to consumers who had credit problems because of a one-time incident, like a huge medical bill or losing a job.
Lawsuit accuses Wells Fargo of biased lending in Chicago area, Reuters, November 28, 2014
Mortgage Lenders Set to Relax Standards, The Wall Street Journal, November 28, 2014
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