U.S. District Judge Otis Wright II in Los Angeles said the city's allegations were legally sufficient to proceed with the case.
The city sued Wells Fargo,
Los Angeles homeowners lost about $78.8 billion in home values as the result of 200,000 foreclosures from 2008 through 2012, the city said, citing a report by the Alliance of Californians for Community Empowerment and the California Reinvestment Coalition. The lost property tax revenue to the city has been $481 million, according to the complaints.
The city seeks to hold the banks liable for lost tax revenue and increased municipal services stemming from the foreclosures. The ruling Wednesday only relates to the lawsuit against Wells Fargo, the largest home lender in the U.S.