JPMorgan Accused by Los Angeles of Discriminatory Lending
The City of Los Angeles accused JPMorgan Chase & Co. of targeting minority borrowers with predatory loans in a lawsuit filed two days after Wells Fargo & Co. lost a court bid to dismiss a similar case.
The second-largest U.S. city sued Wells Fargo, Citigroup Inc. and Bank of America Corp. last year, saying the lenders engaged in biased practices since at least 2004 by placing minority borrowers in mortgages they couldn’t afford and driving up the number of foreclosures in their neighborhoods.
"L.A. continues to suffer from the foreclosure crisis, from blight in our neighborhoods to diminished revenue for basic city services," City Attorney Mike Feuer said in a statement. "We're fighting to hold those we allege are responsible to account."
The claim against New York-based JPMorgan is the most recent in a series of lawsuits by municipalities across the U.S. to hold mortgage lenders responsible for fallout from the collapse of the housing market. Yesterday, Providence, R.I., sued Banco Santander SA's U.S. unit, alleging discriminatory lending in the years after the recession.
In today's suit and earlier ones by Los Angeles, the city accuses the banks of historically "red-lining" black and Hispanic areas as no-loan zones. Starting in the late 1990s, the banks engaged in "reverse red-lining" by flooding the areas with subprime mortgages even when minorities qualified for better terms, according to the complaint filed today in federal court in Los Angeles.
In addition, JPMorgan has since 2009 declined to offer refinancing or loan modification to minority customers on "fair terms," according to the complaint.
"We are disappointed the L.A. city attorney is pursuing an adversarial approach to address city finances impacted by the recent economic downturn," JPMorgan spokeswoman Suzanne Ryan said in an emailed statement. "The downturn was beyond our control."
Counties encompassing Chicago and parts of Atlanta have made similar claims in lawsuits against units of Bank of America and HSBC Holdings. The banks deny the claims, which allege violations of the Fair Housing Act of 1968.