Mortgage Daily Logo

City of LA Sues Another Lender

Mortgage News

For the third time in two days, the city of Los Angeles has sued a large mortgage lender over allegations that discriminatory practices led to a wave of foreclosures.

The first two lawsuits were filed on Thursday against Citigroup Inc. and Wells Fargo & Co. by Los Angeles City Attorney Mike Feuer.

According to the complaints filed in federal court, Citi and Wells Fargo “engaged in a continuous pattern and practice of mortgage discrimination in Los Angeles since at least 2004 by imposing terms or conditions on a discriminatory and legally prohibited basis.”

The lawsuit seeks to recover lost property tax revenues it claims were lost as a result of reduced values resulting from the alleged discrimination. It also seeks the increased cost to the city for services on the foreclosed properties.

What’s interesting about this approach is that the city of Los Angeles and its counterparts across the country experienced increased property taxes beginning in 2004 when expanded subprime lending increased the pool of homebuyers and, in turn, raised property values.  

So it’s likely that the alleged lost revenues are based on a decline from a period when values were inflated from the very lending practices being condemned by the city.

On Friday, another complaint was filed by the city against Bank of America Corp. and subsidiary Countrywide Financial Corp.

As was the case with the other two lawsuits, Los Angeles is being represented by Hagens Berman Sobol Shapiro LLP — a firm that has been behind numerous recent lawsuits against mortgage lenders alleging botched loan modifications or investors fraud.

The city alleges that BofA, Citi and Wells Fargo have been violating the Fair Housing Act of 1968 since at least 2004. Both intentional discrimination and disparate impact discrimination are alleged.

“In order to maximize profits at the expense of the city of Los Angeles and minority borrowers, BofA adapted its unlawful discrimination to changing market conditions,” the complaint alleges. “This unlawful pattern and practice conduct is continuing through the present and has not terminated. Therefore, the operative statute of limitations governing actions brought pursuant to the federal Fair Housing Act has not commenced to run.”

BofA allegedly used traditional redlining and reverse redlining. The city claims BofA is among many banks that have been redlining since the late 1990s.

“Between 1996-2006, one category of discriminatory loan products — subprime loans — grew throughout the country from $97 billion to $640 billion,” the city claims. “These loans were frequently targeted to minorities. Upon information and belief, the lack of accessible credit resulting from BofA’s previous pattern and practice of redlining in the minority communities in Los Angeles created conditions whereby the bank could easily target and exploit underserved minority communities which, due to traditional redlining, had been denied credit.”

Around 2007, Los Angeles claims that BofA again adapted to market conditions and stopped extending credit to minorities.

Related Posts

NewDay USA CEO Rob Posner Expects 10% Increase in 2019 Mortgage Loan Volume

There is No Such Thing as a Free House …

Over the past several years, those who service loans in the State of Washington(1) have seen a dramatic rise in the number of lawsuits in which delinquent borrowers seek to quiet title to their homes on the grounds that lenders are barred from foreclosing based on...

NewDay USA CEO Rob Posner Expects 10% Increase in 2019 Mortgage Loan Volume

Mortgage Servicer Portfolios

servicing news | mortgages outstanding statistics | foreclosure news   Servicing Portfolios as of 2018 | 2017 | 2016 | 2015 | 2014 | 2013 | 2012 | 2011 | 2010 | 2009 | 2008 | 2007 | 2006 Residential Servicing Portfolios by Servicer Last Updated December 14, 2018...

NewDay USA CEO Rob Posner Expects 10% Increase in 2019 Mortgage Loan Volume

Fannie Mae Profile

Last Updated December 27, 2018 7:38 PM Central   full list | other directories | bank search | SEC filings | execs | m&a | production   Government Takes Over Fannie, Freddie Sept. 8, 2008 The government has seized control of Fannie Mae and Freddie Mac. The move --...

NewDay USA CEO Rob Posner Expects 10% Increase in 2019 Mortgage Loan Volume

Freddie Mac Profile

Government Takes Over Fannie, Freddie Sept. 8, 2008 The government has seized control of Fannie Mae and Freddie Mac. The move -- which is likely to push mortgage rates lower and provide a sense of stability for the more than 10,000 employees at both companies -- is a...

Popular posts

How Long Does It Take to Refinance a Mortgage
How Long Does It Take to Refinance a Mortgage

So, you’re interested in refinancing your mortgage. Maybe you want some extra capital to do that home project you’ve always dreamed of, interest rates are nearing record lows, or you want to start consolidating debt. Regardless of the motivation behind the refinance,...

How Does Refinancing a Mortgage Work
How Does Refinancing a Mortgage Work

A home purchase is considered an investment, and a robust one at that. Savvy owners are constantly looking for new ways to reduce debt, save money, pay less in interest, and ultimately build equity. Refinancing is one way to leverage your investment and do just that....

What Does It Mean to Refinance Your Home
What Does It Mean to Refinance Your Home

You can think of refinancing your mortgage as a debt redo. Essentially, you’ll swap out the existing loan for a new one - ideally with better terms and conditions. Only this time it could help you save money on high mortgage payments, rather than just borrow it....

Setting up the Utilities in My New House
Setting up the Utilities in My New House

All the tedious, time-consuming home closing documents have been signed, sealed, and delivered. Your belongings are packed into what seems like a million boxes and you have a solid plan to haul all your existing furniture to the new place. Just as your boxes and...

When Is My First Mortgage Payment Due?
When Is My First Mortgage Payment Due?

Navigating your way through a brand new mortgage loan can be a difficult task, especially for first time homeowners. After handing over a large sum of money for the down payment and closing costs, it’s important to pay attention to the timing of your first mortgage...

Newsletter

Don’t worry, we don’t spam