Cook County, Illinois, home of the third most populated city in the U.S., has filed a lawsuit against Wells Fargo, accusing the nation's largest residential mortgage lender of predatory lending practices.
The complaint filed by Cook County, which is home to Chicago and has a population of about five million, accuses Wells Fargo of violating the Fair Housing Act by engaging in a practice known as "equity stripping." The county alleges that Wells Fargo targeted minorities, particularly Latinos and African-Americans, for high-cost mortgage loans in order to maximize the bank's profits and assets without regard to the borrower's ability to repay the loan.
The county alleges in the complaint that this practice led to a large number of foreclosures in the area, which in turn contributed to the spreading of blight. The complaint says that as many as 26,000 loans may have been affected. The county is believed to be seeking more than $300 million in damages in addition to a court order that requires Wells Fargo to stop the alleged predatory lending practice.
"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," Wells Fargo spokesman Tom Goyda said in an email. "Wells Fargo’s team members live and work in the Chicago area and we stand behind our record as a fair and responsible lender, which includes an $8.2 million down payment assistance grant program that helped create 547 new homeowners in Chicago and the Cook County suburbs over the past two years. We will vigorously defend ourselves and continue to focus on helping customers succeed financially and expanding homeownership in Illinois and across the United States."
Similar lawsuits have been filed against Wells Fargo in the last year by Los Angeles and Miami in regards to the bank's mortgage lending practices. The Miami suit was dismissed in July and is being appealed, while Wells Fargo lost a bid for the dismissal of the Los Angeles suit.