LA Sues Wells Fargo, Citigroup Over Foreclosures The Los Angeles city attorney sued Wells Fargo and Citigroup on Thursday, alleging the companies engaged in mortgage discrimination that led to a wave of foreclosures in minority communities during the housing crash. The twin lawsuits, filed in federal court, are the latest fallout from the 2008 collapse of the subprime mortgage industry, which sparked a string of actions against various lenders by federal agencies and city governments. The city attorney's suits allege a "continuing pattern of discriminatory mortgage lending practices" in Los Angeles that violate the federal Fair Housing Act. They claim Wells Fargo & Co. and Citigroup Inc. at first refused to grant mortgages in minority neighborhoods - a practice known as redlining - and later targeted black and Hispanic neighborhoods for predatory loans, known as reverse redlining. Wells Fargo and Citigroup both said the suits are meritless. "We are disappointed that the LA attorney does not recognize our deep commitment to fair lending," a Citigroup statement said. The lawsuits contend that "vulnerable, underserved borrowers" denied by years of redlining jumped at the chance to obtain subprime home loans they couldn't afford, then were hit by a swarm of foreclosures when the housing bubble burst and they were denied refinancing. "Since 2008, banks have foreclosed on approximately 1.7 million homes in California, and Wells Fargo is responsible for nearly one in five of these foreclosures," the lawsuit against Wells Fargo says. A loan in a predominantly minority neighborhood of Los Angeles is nearly five more times more likely to result in foreclosure that one in a predominantly white neighborhood, the suit claims. "These foreclosures often occur when a minority borrower who previously received a predatory loan sought to refinance the loan, only to discover that Wells Fargo refused to extend credit at all, or on equal terms as when refinancing similar loans issued to white borrowers," it says. The foreclosures caused property values to tumble, costing the city tax revenue, and leaving it holding the bag for the cost of cleaning up and policing vacant properties, the lawsuit claims. Citigroup said it "considers each applicant by the same objective criteria, which are blind to race, ethnicity, gender and any other prohibited basis," the bank said. Using these objective criteria allows us to lend on terms that are consistent with the risk profile of each borrower and gives millions of qualifying consumers the opportunity to own a home. "Wells Fargo has been a part of Southern California for over a century and we are proud of our record as a fair and responsible lender," that bank said in a statement, adding that the allegations "do not in any way reflect our values as a company." Both lawsuits seek unspecified reparations and damages. However, they cite a report by the Alliance of Californians for Community Empowerment and the California Reinvestment Coalition that estimated the mortgage crisis resulted in more than 200,000 foreclosures from 2008 to 2012, with $481 million in lost property tax revenue to the city, and $1.2 billion in Los Angeles for "increased costs of safety inspections, police and fire calls, trash removal and property maintenance." The Los Angeles city attorney's office has previously gone after other mortgage lenders in state court, blaming them for urban blight sparked by the housing market collapse.