Wells Fargo Ghetto Loans Lawsuit Boldly Goes Where No Wells Fargo Ghetto Loans Lawsuit Has Gone Before.
The Wells Fargo ghetto loans lawsuit filed by the City of Miami is going into litigation. As I posted several weeks ago, a federal appeals court revived the Miami’s Wells Fargo Ghetto Loans lawsuit that accused Wells Fargo and two other lenders of writing “ghetto loans” to black and Hispanic borrowers.
Miami, like other American cities who have sued, alleging that Wells Fargo steered non-white borrowers into higher-cost loans or ghetto loans they often could not afford, even if they had good credit.
In Miami’s Wells Fargo Ghetto Loans lawsuit, the city alleges these ghetto loans led to a large number of foreclosures, lower property tax collections and increased spending to combat urban blight.
A 3-0 vote, the 11th U.S. Circuit Court of Appeals said a lower court erred in dismissing the claims of the Miami’s Wells Fargo Ghetto Loans lawsuit under the federal Fair Housing Act, over what Miami called decades of lending discrimination residential loans given to Blacks and Hispanics.
Circuit Judge Stanley Marcus wrote on behalf of the majority, “It is clear that the harm the city claims to have suffered has a sufficiently close connection to the conduct the statute prohibits.”
Baltimore, Chicago, Cleveland, Los Angeles and Memphis have met with mixed success suing the banks over ghetto loans cases that have left their cities in chaos with Baltimore receiving a $175 million in damages from Wells Fargo.
In July 2014, U.S. District Judge William Dimitrouleas in Fort Lauderdale, Florida dismissed the Miami ghetto Loans lawsuit claiming the city lacked standing and that the city did not offer enough evidence to support their claims that ghetto loans caused these problems.
The 3-person panel on the appeals court said that standard was too stringent and that banks could have reasonably foreseen the “attendant harm” from their alleged discriminatory lending. The 11th Circuit did not rule on the merits.
Below is the 11th Circuit COA’s ruling: