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Bank of America Loses Bid to Have Chicago Predatory Lending Lawsuit Dismissed

BankA federal judge has rejected Bank of America's bid to dismiss a lawsuit filed by Cook County, Illinois, in which the county accused the megabank of predatory lending practices in the Chicago area, according to media reports.

U.S. Judge Elaine Bucklo in Chicago ruled that Cook County, the nation's second-most populated county behind only Los Angeles, would be allowed to pursue its case against Bank of America. According to reports and to Bank of America's statement, the judge did not rule on the merits of the case.

The county alleges that the bank engaged in a practice commonly known as "reverse redlining" in which a lender extends access to credit based on unfair terms such as race or ethnicity and in certain geographic areas. The lawsuit accuses Bank of America of making about 95,000 loans to minority borrowers on less favorable terms than those extended to white borrowers, according to reports. Cook County says that the bank's alleged predatory lending practices resulted in a higher number of foreclosures, increased blight, and lower property taxes in urban Chicago.

Bank of America was seeking to have the suit dismissed, claiming that the county lacked standing to sue and waited too long to initiate litigation. The bank also says the county did not prove that the bank violated the Fair Housing Act, according to reports.

"This is a procedural ruling, not a decision on the merits of the County’s case," Bank of America said in a prepared statement. "The court’s ruling makes clear that while the county makes plausible allegations to allow the case to proceed, it will bear the ultimate burden of supporting its claims with competent evidence at future stages of the litigation. The factual and legal issues in this case will be very complex. Bank of America’s record demonstrates a firm commitment and strong record for fair and responsible lending and community revitalization. We responded with urgency to rising mortgage defaults that resulted from the nation’s severe economic downturn, which the county’s suit all but ignores, providing unprecedented assistance to customers who have suffered personal financial hardships, and working with government agencies and non-profit organizations to revitalize neighborhoods."

The judge noted in her ruling that the U.S. Supreme Court is expected to rule in June as to the scope of claims that can be made under the Fair Housing Act, and that decision could have an impact on the Cook County case against Bank of America.

Cook County brought a similar case against another megabank, Wells Fargo, in December, alleging that the bank engaged in a practice known as "equity stripping" in which the lender targets minorities for high-cost mortgage loans in order to maximize profits and assets without regard to the borrower's ability to repay the loan. Last March, Cook County sued HSBC Holdings, claiming similar predatory lending practices.

About Author: Brian Honea

Brian Honea's writing and editing career spans nearly two decades across many forms of media. He served as sports editor for two suburban newspaper chains in the DFW area and has freelanced for such publications as the Yahoo! Contributor Network, Dallas Home Improvement magazine, and the Dallas Morning News. He has written four non-fiction sports books, the latest of which, The Life of Coach Chuck Curtis, was published by the TCU Press in December 2014. A lifelong Texan, Brian received his master's degree from Amberton University in Garland.

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