(Bloomberg) -- JPMorgan Chase engaged in a pattern of discriminatory lending that led to foreclosures, the city of Miami said in a lawsuit filed last week in federal court, the latest in a series of similar claims against the nations largest banks.
Last month, Banco Santander SAs U.S. unit was sued by the city of Providence, Rhode Island, over claims it stopped issuing mortgages in minority neighborhoods after the housing bubble burst. Santander Bank, previously named Sovereign Bank, pulled out of the neighborhoods and focused on white communities after being acquired by the Madrid-based lender in 2009, the city alleged.
Miami and Los Angeles are among cities to have filed similar lawsuits against Bank of America, Citigroup and Wells Fargo for allegedly red-lining black and Hispanic areas as no-loan zones, and then reverse red- lining, flooding the areas with predatory mortgages even when minorities qualified for better terms.
Miami is seeking damages for reduced property taxes and higher expenses for municipal services associated with foreclosures, according to June 13 lawsuit, which alleges JPMorgan violated the federal Fair Housing Act. As of October, Florida had the highest foreclosure rate in the country, and is a leading state in numbers of owner-vacated zombie properties, according to the complaint.
Many of the bad loans that led to foreclosures were issued in primarily black and Hispanic neighborhoods, the city alleged. The city said it identified almost 2,400 discriminatory loans issued by JPMorgan from 2004 to 2012 that resulted in foreclosure proceedings.
JPMorgan has engaged in a continuous pattern and practice of mortgage discrimination in Miami since at least 2004 by imposing different terms or conditions on a discriminatory and legally prohibited basis, lawyers for Miami said in the complaint. The bank did this in order to maximize profits at the expense of the City of Miami and minority borrowers, the lawyers alleged.
Nearby Miami Gardens, with a population of about 100,000, also filed lawsuits June 13 in Miami federal court asserting similar allegations against Bank of America, Citigroup, Wells Fargo and JPMorgan.
Amy Bonitatibus, a spokeswoman for New York-based JPMorgan, the biggest U.S. bank, said in a statement that Miamis claims are baseless and stand contrary to our long record of providing affordable housing to low to moderate income families across the region.
Bonitatibus said the bank is disappointed the city chose to file the lawsuit to address unrelated city finances impacted by the record economic downturn.
The case is City of Miami v. JPMorgan Chase & Co., 1:14- cv-22205, U.S. District Court, Southern District of Florida (Miami).
Register or login for access to this item and much more
All Financial Planning content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access