Golden Gate University Law Review


The Financial Services Modernization Act of 1999 partially deregulated the financial industry under the premise of helping “everyone attain the American dream of home ownership.” In 1999, the “Fannie Mae” made subprime mortgage loans readily accessible to those who normally would not qualify. People in Oakland, who “used to find it difficult to obtain mortgages,” were suddenly able to obtain mortgage loans, but with subprime terms, which started with low monthly payments, but would increase based on changes in the market interest rates. By 2008, subprime borrowers began defaulting on their loans at an unprecedented rate.

During the 2008 mortgage crisis, many Oakland residents lost their homes, gang graffiti adorned the buildings, and abandoned homes became a breeding ground for drug dealers. A similar scenario plagued the City of Cleveland.

This Note argues, the Ninth Circuit erred in denying Wells Fargo’s motion to dismiss Oakland’s reduced property tax claim: Oakland did not show proximate cause for its reduced tax revenue claim because Oakland’s harm ran far beyond the first step. Oakland failed to establish a direct connection between asserted injuries and Wells Fargo’s alleged predatory lending practices. This Note applied a different interpretation of the Holmes three-factor feasibility test.