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Jun
2014
3

City of L.A. Sues JPMorgan for Systematically Steering Minorities Into Foreclosure

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The City of Los Angeles has filed a lawsuit against JPMorgan Chase alleging the financial titan steered minority borrowers into homes they could not afford, triggering a foreclosure wave whose effects can still be felt in the city today.  The lawsuit cites a report conducted by a low-income advocacy group that claims the mortgage crisis caused over 200,000 foreclosures in Los Angeles between 2008 and 2012.  

The wave of foreclosure lowered property values in many neighborhoods and cost the city nearly $481 million in property tax values.  Additional costs to the city — in the form of expanded safety inspections, emergency response, and property maintenance on these foreclosed homes — have cost an estimated $1.2 billion, according to the report.

In a statement announcing the lawsuit, L.A. City Attorney Mike Feuer said:

“L.A. continues to suffer from the foreclosure crisis — from blight in our neighborhoods to diminished revenue for basic City services.  We’re fighting to hold those we allege are responsible to account and to help bring back every community in our City.”

The lawsuit is similar to those filed by the city attorney in the past year against Wells Fargo, Bank of America, and CitiGroup.  In a statement, JPMorgan promised to “vigorously defend” itself against the lawsuit.  Company spokesman Jason Lobo said, “The facts don’t support their claims and are contradicted by our demonstrated commitment to minorities in the Los Angeles area.”

The Los Angeles Times provides a basic description of the lawsuit:

The JPMorgan lawsuit, like the others, accuses the bank of placing minority borrowers into riskier loans than it did to “similarly situated” white borrowers. Those loans caused a disproportionate number of foreclosures in minority neighborhoods compared to white neighborhoods, according to the city.

When the housing market crashed, JPMorgan then curtailed credit to minority borrowers on a racially discriminatory basis, the lawsuit alleges. If the bank did lend to minorities, it continued to do “so on predatory terms,” the lawsuit alleges.

That practice continues “through the present and has not terminated,” the city alleged.

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