Predatory lending lawsuit dismissed

Ruling may affect Miami Gardens’ similar suit against big banks

Miami Times staff report | 7/17/2014, 9 a.m.

Miami Gardens’ lawsuit accusing major banks of predatory lending was dealt a potential blow last week when a federal judge dismissed similar complaints by the City of Miami, which accused Bank of America and Citigroup of causing the city’s tax base to plummet by creating a foreclosure crisis in minority communities.

Judge William Dimitrouleas ruled that the city had no right to sue the banks for its economic losses. In addition to ruling that the statute of limitations on the cases had expired, Dimitrouleas dismissed the city’s claim that the banks had “unjustly enriched” themselves because the homes were subject to benefit from municipal services.

Dimitrouleas who presided over both cases, dismissed the complaints against Bank of America and Citgroup on last Tuesday and Wednesday respectively. Another lawsuit by the City of Los Angeles was also thrown out.

The city claimed the banks violated the 1968 U.S. Fair Housing Act by targeting minority communities with high-interest loans. Those sub-prime mortgages triggered a collapse in the housing market that sent the country into a major economic recession that severely crippled global markets.

Despite the hardships, Dimitrouleas ruled banks were not liable for the city’s losses.

“The City’s complaints of decreased tax revenue and increased municipal services are ‘so marginally related to’” the Fair Housing Act that the city had no grounds to sue, Dimitrouleas wrote.

Many Blacks were among those who lost their homes due to bank foreclosures. Residents and government officials from the City of Miami watched as property values plummeted leaving the city with a towering debt.

The City of Miami responded by filing separate lawsuits on Dec. 13 against three of the nation’s largest banks, claiming they defrauded Black borrowers into receiving mortgages they couldn’t afford through discriminatory lending practices. These practices, the city claimed, resulted in damaging foreclosures.

The City of Miami was represented by the law firm of Hagens Berman Sobol Shapiro LLP. The City of Miami Gardens filed similar lawsuits against JP Morgan Chase, Bank of America, Wells Fargo and Citigroup on July 2. Unlike Miami’s cases, three different judges are presiding over the City of Miami Gardens’ lawsuits.

Officials from the City of Miami Gardens did not respond to an email seeking comments on this story before press time.