Citigroup Inc. and Wells Fargo & Co. were accused of discriminatory mortgage lending by the city of Los Angeles, which seeks damages for reduced property tax revenue and the costs of maintaining foreclosed properties, Bloomberg News reported today. The city filed complaints against both banks yesterday in federal court in Los Angeles. The city alleges that Citigroup and Wells Fargo have been engaged in discriminatory lending to minority borrowers since at least 2004, which placed the borrowers in loans they couldn’t afford and caused a high number of foreclosures in minority neighborhoods. The fact that the two banks’ foreclosures are so “disproportionately concentrated in minority neighborhoods is not the product of random events,” according to the complaints. Homeowners in the second-largest U.S. city lost about $78.8 billion in home values as the result of 200,000 foreclosures from in 2008 through 2012, the city said, citing a report by Alliance of Californians for Community Empowerment and the California Reinvestment Coalition. The lost property tax revenue to the city has been $481 million, according to the complaints.
