A lawsuit has been filed against Wells Fargo & Co. by Cook County in Chicago area on allegations of discriminatory and predatory lending practices.
The country’s biggest mortgage lender has been accused of subjecting female and minority borrowers to discriminatory and predatory lending practices, leading to an expected hundreds of millions of dollars in damages.
The lawsuit was filed in Chicago on Friday. The Cook County has alleged Wells Fargo of being engaged into a questioned practice known as “equity stripping,” i.e. imposition of inflated or unrequired rates and fees along with penalties to refinance. The practice is alleged to have occurred for much of the past decade and it may involve about 26,000 loans and compensatory damages topping USD 300 million, according to the lawsuit.
The lawsuit alleges: “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 in disregard for a borrower’s ability to repay. The predatory and discriminatory nature of (the) defendants’ mortgage lending and servicing practices at issue are grounded in (the) defendants’ placement of their own financial interests above the best interests of their borrowers.”
Meanwhile, San Francisco-based Wells Fargo turned down the allegations saying, “We vigorously defend ourselves and continue to focus on helping customers succeed financially and expanding home ownership in Illinois and across the United States.”
“The county’s accusations are baseless and 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,” the company said in an emailed statement.
The company also mentioned a USD 8.2 million down-payment assistance grant program that helped in the creation of 547 new homeowners in Chicago and the suburbs in Cook County over the past two years.