Wells Fargo sued over home equity lines of credit
NEW YORK — Wells Fargo is facing a lawsuit claiming the bank illegally reduced the size of customers’ home equity lines of credit.
The suit, which was filed in Illinois, claims Wells Fargo failed to accurately assess the value of customers’ houses before deciding to cut the size of their credit lines. Wells Fargo is accused of using unreliable computer models that wrongly valued home prices too low, and then did not properly notify customers about the reductions in the credit lines.
Nearly all banks have been hit hard by mounting loan losses tied to residential real estate over the past two years. Reducing lines of credit can limit exposure to the struggling sector.
Wells Fargo did not immediately comment on the lawsuit.