The City of Los Angeles last week filed a lawsuit against Bank of America Corp. (NYSE: BAC), alleging the company practiced discriminatory mortgage lending in several of the city’s minority communities.
The lawsuit, filed Friday in U.S. Federal Court, alleges that Bank of America “engaged in a continuous pattern and practice of mortgage discrimination in Los Angeles since at least 2004 by imposing different terms or conditions on a discriminatory and legally prohibited basis,” according to a document from the Office of Los Angeles City Attorney Mike Feuer.
Pursuant to the Fair Housing Act of 1968, the City of Los Angeles claims that Bank of America violated the Act by refusing to extend mortgage credit to minority borrowers in Los Angeles on equal terms as offered to non-minority borrowers.
Feuer’s office also alleges that BofA practiced predatory lending to minority borrowers on the basis of race or ethnicity, placing these borrowers in loans they could not afford.
The result of these alleged practices led to an increase of an “excessive and disproportionately high number of foreclosures” in the city’s minority neighborhoods, while also reducing property tax revenue and increased cost for city services in the affected communities.
“As property values drop an estimated $78.8 billion, Los Angeles communities could lose as much as $481 million in property tax revenue from the decreased value of the foreclosed homes themselves and those in the surrounding neighborhoods,” writes the complaint.
A Cost to Los Angeles report referenced in the compliant attributes BofA’s mortgage lending practices to more than $26 billion lost in home values in communities across L.A. for the estimated 200,000 foreclosures from 2008 through 2012.
Feuer filed a similar suit Thursday against Citigroup and Wells Fargo, alleging the banks also practiced discriminatory mortgage lending in Los Angeles’ minority communities.
Written by Jason Oliva