B of A, Wells, Citi Beat Miami's Mortgage Race Bias Suits
Bank of America Corp., Citigroup Inc. and Wells Fargo & Co. won dismissal of lawsuits brought by the city of Miami claiming they flooded minority neighborhoods with predatory mortgages before the housing bubble burst.
The city lacks standing to bring claims under the Fair Housing Act and filed the cases too late, U.S. District Judge William Dimitrouleas ruled yesterday in Miami, without elaborating.
The decisions contrast with findings over the past two months by a federal judge in Los Angeles, where the three lenders all lost separate bids for dismissal of that city's almost identical mortgage-discrimination suits. The judge in those cases ruled Los Angeles did have standing to file fair-housing claims and did so within the allowed time.
The city is pursuing the cases as investment banks seek to move on from U.S. probes into their mortgage practices, including claims they failed to tell investors about the health of the loans that were bundled into securities and sold.
Bank of America alone has paid more than $50 billion to resolve claims over shoddy mortgages, most tied to its 2008 purchase of Countrywide Financial Corp., once the biggest U.S. mortgage lender.
Miami and Los Angeles asked for damages from the banks for lost property-tax revenue and increased municipal services stemming from foreclosures that they claim are the result of discriminatory lending practices. The banks knew the loans were likely to fail and issued them anyway, the cities claimed.
The rulings in Miami bode well for JPMorgan Chase & Co., which was sued by the city in June and hasn't yet filed a motion to dismiss. Miami sued Bank of America, Citigroup and Wells Fargo in December.
Miami's claims for unjust enrichment by the banks were also dismissed. The judge said he would allow the city to attempt to overcome deficiencies by filing a revised lawsuit on that claim alone by July 21, "out of an abundance of caution," according to the ruling.
The city of Miami's communications office didn't immediately reply to a message requesting comment on the case.
In May, Banco Santander SA's U.S. unit was sued by the city of Providence, R.I., 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.