A federal lawsuit filed Friday in Cook County, Ill. accuses Wells Fargo of disproportionately targeting minorities with high-cost mortgage loans, spurring a foreclosure crisis in the area.
Cook County officials filed the suit, alleging Wells Fargo over the past decade approved high-cost, high-risk loans for women, Hispanic and African-Americans more often than others.
The suit alleges that Wells Fargo was interested in more costly mortgage loan products that carried greater risk for borrowers but that generated more income. Damages could total $300 million, the suit claims.
Typical mortgage lenders are concerned with proper loan underwriting and the borrowers ability to repay the loan over time, the suit said.
"The predatory and discriminatory nature of defendants mortgage lending and servicing practices at issue are grounded in defendants placement of their own financial interests above the best interests of their borrowers," according to the suit.
The minority borrowers paid, on average, tens of thousands of dollars more for a loan than others, and were more likely to have pre-payment penalties, credit issues, loan defaults and foreclosure, the suit states.
Wells Fargo spokesman Tom Goyda said the accusations are baseless.
Its disappointing they chose to pursue a lawsuit against Wells Fargo rather than collaborate together to help borrowers and home owners in the County, Goyda said in a statement.