Consumer Law

Wells Fargo Sued For Reducing Home Equity Credit Lines

By Randall Ryder

In Illinois class action complaint (PDF), a homeowner alleges Wells Fargo violated federal regulators’ warnings by reducing credit limits on all accounts in a geographic area without assessing the value of the actual houses.

The homeowner accuses Wells Fargo of using “unreliable or inaccurate analyses” to determine property values—using computer models to predict home values—rather than individually assessing them. Interestingly, while Wells Fargo cut the homeowner’s home equity line of credit in half, it also increased his credit card limit—which had a higher interest rate, of course.

Wells Fargo responded by saying “our controls are based on contractual and regulatory guidelines, and include a fair appeals process. While we are beginning to review the lawsuit, from what we have read so far, it appears to mischaracterize credit controls designed to sustain homeownership.”

Or something.

Wells Fargo sued over home equity loans | South Florida Business Journal

(photo: jacobgrier)

Full post as published by Caveat Emptor on August 21, 2009 (boomark / email).