Cook County Record

Wednesday, April 1, 2020

Wells Fargo: Cook County must end 'obstruction, show specific lending discrimination to back claims in redlining lawsuit

Federal Court

By Jonathan Bilyk | Mar 3, 2020

Wells fargo atms ny
Tdorante10 [CC BY-SA 4.0 (https://creativecommons.org/licenses/by-sa/4.0)]

One of the country’s largest mortgage lenders is continuing to press the attack against Cook County in federal court, as it defends against the county’s accusations of discriminatory lending practices.

On March 3, Wells Fargo asked a judge to order Cook County to list precise examples of racially discriminatory loans. To date, the bank said, the county has refused to do so, instead continuing to rely on what Wells Fargo’s attorneys described as little more than “rhetoric and accusatory labels.”

“The County has steadfastly refused to identify any allegedly unlawful loans, and there is no good faith basis for its refusal,” Wells Fargo wrote in its recent filing. “… This case has been pending for over five years, and the parties have been in discovery for nearly two years, but the County has still failed to identify even a single incident of unlawful conduct that violated the Fair Housing Act.”


Abram Moore | K&L Gates

The filing comes as the parties continue to vigorously litigate the long-running dispute over the county’s lawsuit.

Cook County filed suit against Wells Fargo in 2014, accusing the bank of alleged predatory lending practices which violated federal lending laws and rules. The lawsuit specifically accused the bank of a practice known as reverse redlining. Under such a practice, lenders agree to provide home mortgage loans to minority borrowers, such as African Americans or Latino Americans, but under rates and terms more onerous than those provided to white borrowers with similar financial standing.

The county has asserted such lending practices helped fuel the housing crisis amid the Great  Recession in the years immediately following 2008, leaving swaths of vacant houses which slashed home values in predominantly minority neighborhoods and drained the county and other local governments of tax money and resources.

The county leveled similar allegations in separate lawsuits against other lenders, including Bank of America and HSBC.

Elsewhere, the banks were also sued under similar allegations by other local governments, including notably by the city of Miami, Fla.

Miami won a key legal victory last year, when the U.S. Eleventh Circuit Court of Appeals in Atlanta ruled the city could press its discrimination claims.

That ruling was immediately cited by Cook County in support of its lawsuits, as well, as the county sought to use the Eleventh Circuit’s decision to strengthen its hand against the big banks.

However, the city of Miami inexplicably chose to drop those lawsuits a little over a month ago. The parties confirmed no settlements were reached before Miami dropped its lawsuits.

For now, Cook County is seeking to continue its actions, even as it labors under court orders limiting its ability to press its claims.

In the Wells Fargo case, for instance, a federal judge limited the county’s claims solely to costs the county may have suffered in handling foreclosures.

Last fall, Wells Fargo argued in court filings that the county is attempting to hide that actual impact. The bank said it believes the county may have actually profited from the foreclosure waves, pointing to such statements as a Cook County Sheriff’s Office’s budget listing the explicit goal of brining “more judicial sales to the county and thus dramatically increasing revenues” for the Court Services Department.

For its part, Cook County has countered by accusing Wells Fargo of attempting to hide information the county believes it could use to establish whether Wells Fargo violated other laws, in addition to its alleged violations of the Fair Housing Act.

However, in its newest filing, Wells Fargo said the county must be made to answer questions the bank’s lawyers submitted requesting specific loans made by Wells Fargo that Cook County believes are discriminatory.

Wells Fargo said it submitted information on more than 430,000 loans, including 216,000 loans for which the bank says full racial and ethnic data on the borrowers was available.

Wells Fargo said the county’s “obstruction” over the question is “an obvious attempt to sandbag Wells Fargo,” and prevent the bank from mounting its defense.

Wells Fargo noted Cook County had provided just such a list last year in its parallel action against Bank of America.

“The time for the County’s generalized aspersions about ‘the mortgage loans [Wells Fargo] discriminatorily originated and/or serviced’ is over,” Wells Fargo wrote. “… The County’s efforts to delay the appropriate shift in focus to the merits of this lawsuit and whether the County has any evidence of FHA violations suggests what other courts have found to be true in other similar FHA cases that have reached summary judgment: no such evidence exists.”

Wells Fargo is represented in the action by attorney Abram I. Moore and others with the firms of K&L Gates LLP of Miami and Chicago, and Katten Muchin Rosenman LLP, of Chicago.

Cook County is represented in the case by lawyers from the firm of Evangelista Worley LLC, of Atlanta

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Organizations in this Story

U.S. District Court for the Northern District of IllinoisU.S. Court of Appeals for the Eleventh CircuitKatten Muchin Rosenman LLPWells FargoK&L GatesEvangelista Worley, LLCCook CountyCity of Miami