City of Miami files suit against banks
Blames Citigroup, Wells Fargo, & Bank of America for real estate loss
Carla St.Louis | 1/9/2014, 9 a.m.
As Blacks lost their homes to bank foreclosures, officials from the City of Miami watched property values plummet leaving the city with a towering debt.
The City of Miami retaliated by filing separate lawsuits against three of the nation’s largest banks, claiming they discriminated against Black borrowers in poor neighborhoods that resulted in damaging foreclosures for the City.
Filed on December 13th by Hagens Berman Sobol Shapiro LLP, CitiGroup, Wells Fargo, and Bank of America are accused of defrauding Black borrowers into receiving mortgages they couldn’t afford through discriminatory lending practices.
Each lawsuit included statements from former bank employees claiming they witnessed unfair treatment to Black borrowers.
One undisclosed former employee of CitiGroup alleged eligible Black borrowers in Miami were six times more likely to receive a predatory loan than a white borrower.
In the complaint, the City of Miami argued the defendants engaged in a complex pattern of mortgage discrimination since 2004 that included:
• Systematic predatory lending to Black borrowers
• Failing to extend credit on equal terms for Black borrowers that were offered to white borrowers
• Imposing different terms or conditions on Black borrowers
City seeks financial reimbursement from banks
These discriminatory practices, alleged the City of Miami, caused a wave of foreclosures within the municipality starting with the financial crisis and extending to now.
The suits seek damages on behalf of the City of Miami, which attorneys claim lost millions in decreased property tax revenues and increased municipal service costs.
It also seeks compensation for the Miami Police Department having to absorb the cost of responding to more threats in foreclosed properties. A task, they argued, resulted in hiring additional personnel and buying more resources to respond to fire-related problems.
The Miami Building Department and Code Enforcement/Code Compliance Departments is also requested reimbursement of funds for increased personnel time, issuing inspections & violations and condemning & demolishing vacant buildings.
“We normally do not comment on pending litigation but I can say that this suit was spearheaded by Commissioner Francis Suarez,” said City Attorney Victoria Mendez. “He brought this discrimination to the attention of his fellow commissioners and they voted unanimously to file suit.”
“The goal here is to punish the banks for their practices and to recover for the city and its citizens a portion of as much of the damages as is possible to recover,” City Commissioner Francis Suarez said to the Miami Herald.
When asked about the lawsuit, City of Miami Mayor Tomas Regalado declined to comment.
All three banks defended their lending practices in written statements while CitiGroup was the only bank to openly discuss race saying their application process is “blind to race, ethnicity, gender and any other prohibited basis.”
Wells Fargo referred to the allegations as “unfounded” saying they ”don’t reflect our corporate values,” and Bank of America claimed that in times of financial hardships, they “responded urgently with the solutions to assist them.”
Hagens Berman filed a similar set of lawsuits against the same defendants on behalf of the City of Los Angeles.
For more information about the City’s case, log on to http://bit.ly/1kmjThl