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Appeals Court Dismisses LA Case v. BofA, Wells

Claims filed by the city of Los Angeles against Bank of America and Wells Fargo have been dismissed, after going before an appellate panel in the Ninth Circuit Court of New York earlier this week. The city accused the two banks of pushing more expensive, riskier mortgage loans when dealing with minority borrowers.

The city of Los Angeles filed the complaints in December 2014, claiming both banks targeted minority populations with “exploitative and predatory subprime loans until 2007,” according to Law360. It was at the point, Law360 reports, that “the banks began withholding loans from minority borrowers, regardless of creditworthiness.”

According to the suits, Los Angeles claimed that an analysis of both banks’ activities showed they issued “predatory” loans to minority borrowers—as well as borrowers in heavily minority neighborhoods—more often than they did white borrowers. The suits against both banks were addressed in 2015 when two district judges failed to find evidence linking any racial homeownership disparities to specific bank policies or practices.

This week’s appellate panel ultimately agreed with these initial judgments, saying the city failed to establish a strong enough link between the policies of the two banks and any statistics racial discrepancy in LA homeownership.

“The city failed to show a robust causal connection between any disparity and a facially neutral Wells Fargo policy,” the panel’s opinion stated.

The panel ruled similarly on the Bank of America claim.

“The record does not reflect that the city raised a genuine issue of material fact as to a policy or policies with a robust causal connection to the racial disparity,” the decision read.

This is the second time Los Angeles has filed claims of this nature; in 2014, the city filed suit against the two banks claiming they violated the Fair Housing Act, engaging in lending practices that discriminated against minorities. The suit also claimed these practices caused increased foreclosures, which lowered local property tax revenues and increased city expenditures.

According to a representative from Wells Fargo, the bank is happy with the court’s “very quick decision to uphold the district court’s thoughtful ruling.”

About Author: Aly J. Yale

Aly J. Yale is a longtime writer and editor from Texas. Her resume boasts positions with The Dallas Morning News, NBC, PBS, and various other regional and national publications. She has also worked with both the Five Star Institute and REO Red Book, as well as various other mortgage industry clients on content strategy, blogging, marketing, and more.
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