Foreclosures continue to be a national problem, and one metro's City Attorney thinks a large part of the problem came from discrimination. Los Angeles City Attorney Mike Feuer is suing [1]one of the nation's largest banks, JPMorgan Chase, alleging the bank engaged in discriminatory lending.
The city contends the mega-bank caused a wave of foreclosures that diminished the city's property tax revenues and increased the need for costly city services. Allegedly, the bank engaged in a pattern of imposing different terms or conditions to consumers on a discriminatory basis, or "redlining."
"JPMorgan engaged in reverse redlining, and continues to engage in said conduct, by extending mortgage credit on predatory terms to minority borrowers in minority neighborhoods in Los Angeles on the basis of the race or ethnicity of its residents," the complaint said.
Recently, new litigation against JP Morgan Chase was bolstered by a court ruling that denied a motion by Wells Fargo to dismiss a similar complaint made by the city. Feuer sued Wells Fargo, Bank of America, and Citigroup in December.
"L.A. continues to suffer from the foreclosure crisis—from blight in our neighborhoods to diminished revenue for basic City services," Feuer said. "We're fighting to hold those we allege are responsible to account and to help bring back every community in our City."
The City of Los Angeles is seeking damages for reduced property tax revenues resulting from the decrease in value of foreclosed properties that are often left neglected and vacant, resulting in surrounding properties to lose value. The root cause of the foreclosures, according to the city, is from discriminatory lending practices by JP Morgan Chase.
The suit also seeks damages for the increased cost of city services resulting from foreclosures.
"When banks engage in such discriminatory conduct, the misconduct has profound financial consequences for the cities in which mortgaged properties exist, and banks should be responsible for those financial consequences," the city's complaint read.