In the battle between one of America’s largest cities and one of America’s largest banks, the money reigns supreme. At least, that’s what a federal judge in Los Angeles thinks.
On May 15, 2015 A federal judge threw out a lawsuit by the city of Los Angeles that accused Bank of America of discriminatory mortgage lending. The suit, which was originally filed by the city in 2013, claimed that Countrywide Home Loans (a unit of Bank of America) violated the U.S. Fair Housing Act by making loans to minorities on worse terms than those offered to whites and then refused to refinance them on fair terms.
The actions, claimed the city, was a major cause of foreclosures and neighborhood blight in largely minority neighborhoods. In fact, the lawsuit claimed that loans issued by the bank in Los Angeles’s minority neighborhoods were more than four times more likely to result in foreclosure than those issued in white neighborhoods.
U.S. District Judge Percy Anderson, ruling in City of Los Angeles v. Bank of America Corp et al, threw out the lawsuit because Los Angeles lacked standing to sue under the law, which requires proof of a “concrete injury.”
Bank of America said in a statement it was pleased with the decision. The bank said it responded “with urgency” to rising mortgage defaults caused by the economic downturn in the United States.
The city’s lawsuit sought damages for lost property tax revenue and increased costs of municipal services in neighborhoods hit by foreclosures.
A spokesman and lawyers for the city could not immediately be reached for comment.
The lawsuit was one of a number of actions filed by Los Angeles against various banks over mortgages lending practices before the 2007 housing collapse. The city lost tens of millions of dollars in property tax revenue and incurred huge costs in maintaining public services at a time when the mortgage market went down the drain.
Sadly, the U.S. Fair Housing Act isn’t going to be the way for cities such as Los Angeles to be compensated for the havoc brought on by lenders in pursuit of the almighty dollar. Judge Anderson held that a municipality couldn’t be considered an “aggrieved person” under the US Fair Housing Act.
A corporation is considered a person under the U.S. Supreme Court’s decision in Citizens United v. Federal Election Commission but a municipality isn’t. I guess it just depends which side is argued by the big money.
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