FHA Mortgages

Ninth Circuit dismisses Oakland’s FHA lawsuit in opposition to Wells Fargo – JURIST – Information


The U.S. Ninth District Court of Appeals ruled Tuesday that the city of Oakland, California, cannot sue Wells Fargo for violating the Fair Housing Act (FHA) because the city failed to adequately establish the immediate cause. The court’s decision reverses the previous decision of its three-judge panel.

Oakland alleged that Wells Fargo had directed Black and Latino borrowers into riskier mortgages in violation of the FHA. The city argued that this practice increased foreclosure rates and decreased property value, resulting in a loss of property tax revenue for the city, while creating the need for increased municipal spending to address public health and safety issues. Oakland also alleged that Wells Fargo’s discriminatory lending practices undermined its racial integration goals.

The court found that the US Supreme Court decision in the Bank of America Corp.v. The City of Miami foreclosed Oakland’s lawsuit because of insufficient predictability to create an immediate cause under the FHA. In contrast, the act requires “a direct connection between the alleged harm and the alleged harmful behavior”.

Judge Margaret McKeown, who wrote for the court, found that the city’s alleged “downstream” waves of damage “were” too weakened and “traveled too far beyond” “. Wells Fargo’s alleged wrongdoing to investigate an immediate cause. ”The city argues that Wells Fargo’s discriminatory lending practices resulted in higher loan default rates, triggering higher foreclosure rates that lowered the appraised value of properties and ultimately lost property tax revenues and increased communal income Expenditure. However, the court concluded that this reasoning went beyond that the first step in the causal chain was harm to minority buyers. Judge McKeown also claimed that a rule allowing broader causal theories under the FHA was impossible to work with.

According to Reuters, a city spokesman said Oakland prosecutors “are reviewing the statement and are considering next steps to protect the rights of Oaklanders harmed by Wells Fargo’s discriminatory behavior.”

Wells Fargo spokesman Tom Goyda said in a statement that the bank “will go ahead”. [its] Focus on expanding home ownership opportunities in Oakland City and across the country. ”