Bank of America picked up a victory in court when a federal judge dismissed a lawsuit filed by the city of Los Angeles that accused the bank of discrimination in mortgage lending, according to multiple media reports.
U.S. District Judge Percy Anderson threw out the city of Los Angeles' claims, saying the city had no standing to sue the bank under the Fair Housing Act. Anderson said in his ruling that the city failed to prove that it was harmed as a result of Bank of America's allegedly discriminatory lending practices.
Los Angeles sued Bank of America, one of the nation's largest lenders and servicers of residential mortgages, in December 2013. The lawsuit accused the bank of predatory lending in the run-up to the 2008 financial crisis, saying the terms of mortgage loans offered to minorities were less favorable than those offered to Whites.
The lawsuit claimed many borrowers steered toward these less favorable terms could not sustain the terms of the alleged predatory loans, resulting in defaults, foreclosures, and subsequently, blight. In the lawsuit, Los Angeles said that mortgage loans Bank of America issued in minority areas of the city were four times more likely to end up in foreclosure than the loans issued in predominantly White neighborhoods. The city was seeking damages for lost property tax revenue and increased costs brought about by the foreclosures, according to reports.
In court filings, Bank of America responded to the city's allegations by saying it was "absurd" that its lending practices resulted in large numbers of foreclosures in Los Angeles.
"We are pleased with the Court’s decision," a Bank of America spokesman said in an email to DS News. "Our 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 country’s severe economic downturn, which the Los Angeles suit ignored, providing unprecedented assistance to customers who have suffered personal financial hardships. We continue to work with government agencies and non-profit organizations to revitalize neighborhoods."
The city of Los Angeles has three other similar lawsuits pending against the Citi, Wells Fargo, and JPMorgan Chase.