July 10, 2014

Judge dismisses two city of Miami predatory lending lawsuits

The rulings could mean trouble for the city’s remaining lawsuits against major banks, and for Miami Gardens, which has filed its own complaints.

In rulings that could have broader implications, a federal judge has dismissed lawsuits by the city of Miami claiming that predatory lending by Bank of America and Citigroup created a foreclosure crisis in minority communities and caused the city’s tax base to plummet.

Judge William Dimitrouleas ruled Wednesday that the city, which claimed the banks violated the 1968 U.S. Fair Housing Act by targeting minority communities with onerous and high-interest loans, had no standing to sue Citigroup for economic loss. He also said the statute of limitations had run out on the cases they cited, and he dismissed the city’s claim that the banks had “unjustly enriched” themselves because the homes were subject to benefit from municipal services.

Dimitrouleas’ ruling followed a similar decision Tuesday on a motion by Bank of America to dismiss the city’s lawsuit.

“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.

The rulings are a potentially damaging blow to not only the city of Miami — which filed similar suits against two other banks — but also for Miami Gardens, which has filed its own predatory lending lawsuits and is represented by the same firm as Miami. The city of Los Angeles also has filed predatory lending suits in cases that so far have had different outcomes.

Miami City Attorney Victoria Mendez said little Thursday about the ruling except that she would “regroup with our outside counsel and see what’s next.”

Bank of America, meanwhile, celebrated.

“Our record demonstrates a firm commitment and strong record for fair and responsible lending and community revitalization. We responded with urgency to rising mortgage defaults that resulted from the country’s severe economic downturn, which the Miami suit all but ignored,” bank spokesman Rick Simon said in a statement.

Attorneys and officials for the city of Miami Gardens did not respond to requests for comment.

Both Miami and Miami Gardens sued Bank of America, JPMorgan Chase, Wells Fargo and CitiGroup. Miami officials first filed suit in December against three banks, and then sued JPMorgan Chase last month. The city of Miami Gardens also filed suit last month.

Dimitrouleas is the judge in all four of Miami’s cases. Three different judges are presiding over Miami Gardens’ lawsuits.

Both cities were represented by the firm of Harke Clasby & Bushman. Attorney Lance Harke told The Herald he was out of town and was not in a position to comment on the ruling.

Miami Herald staff writer Lance Dixon contributed to this report.

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