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Wells Fargo will have to answer for property tax losses in Oakland, based on evidence that the bank caused hundreds of foreclosures in the city.
Judge Edward Chen said the city had enough evidence to prove a connection between the bank's loan practices, subsequent foreclosures, and lost property taxes. However, the judge dismissed the city's claim for municipal costs from abandoned homes in the area.
Scandal after scandal, it's another case that shows how far the bank has fallen since its storied days. It also shows how far plaintiffs will go to hitch a ride on the Wells Fargo wagon.
To be fair, Oakland filed its lawsuit in 2015 before the expose that blew up the bank. That's another catastrophic story.
But the backstory was familiar: Wells Fargo steered customers the wrong way. Oakland said that meant targeting people who could not afford the bank's loans.
In the city's lawsuit, attorneys argued that foreclosures depressed property values, created fire hazards and crime. The bank filed a motion to dismiss the case, but the judge said the city had enough to proceed.
"Oakland suggests based on aggregative data that it can prove there is a clear quantifiable link between WF's challenged practice and foreclosure rates and consequent harm to the city," Chen said. "In particular, Oakland has proffered a specific statistical analysis in regard to its property-tax injury."
$50 Billion Loss
The city claims the Oakland housing market fell by $50 billion, but those losses fell primarily at the feet of homeowners -- not the city.
Chen said the city may pursue its lost taxes, but not municipal costs for criminal activities or other adverse effects related to the foreclosed homes.