Los Angeles Claims JPMorgan Practices Discriminatory Mortgage Lending

by San Antonio Attorney

The City of Los Angeles accuses JPMorgan Chase & Co. of practicing discriminatory mortgage lending that increased foreclosures among minority homeowners.

The case filed by Los Angeles is part of its effort to make mortgage lenders accountable for the city’s lost income on property tax due to plunging home values, and the expense to preserve unoccupied foreclosed properties.

The claim filed in Los Angeles federal court accuses the bank of taking part in a mortgage discrimination practice for past ten years. The bank’s practices are redlining, where minority credit seekers are turned down on similar conditions as other credit seekers, and reverse redlining, where credit seekers in minority communities are swamped with subprime mortgages they will not be able to pay for in spite of being qualified for better terms. The bank denies that it is guilty of such allegations.

The city also filed similar cases against Citigroup Inc., Bank of America Corp and Wells Fargo & Co. Cook County, Illinois, has filed the same cases against HSBC Holdings Plc and Bank of America, while Providence, Rhode Island sued a Banco Santander S.A unit. Counties in the Atlanta area have also filed lawsuits against HSBC. Cleveland, Baltimore, and Memphis are among other cities that filed the same claims against the banks.

Between 2004 and 2011, JPMorgan provided loans in mostly Latino or black neighborhoods. The city of Los Angeles claims that the loans to minority borrowers entered foreclosure faster than white borrowers. Part of the lawsuit was based upon confidential statements from past employees of JPMorgan. One of it was an accusation that the bank refused to help struggling borrowers.

There were approximately 200,000 home foreclosures in Los Angeles between 2008 and 2012, resulting in the loss of $78.8 billion in property values, according to the city’s complaint. Last June, Deutsche Bank AG settled a legal action brought by Los Angeles because the bank let many foreclosed properties deteriorate into worse conditions.

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