Miami Gardens - Opa-locka

Miami Gardens sues big banks for predatory lending

Miami Gardens is suing four major banks for predatory mortgage lending targeted at minorities, which the city believes led to a reduction in property taxes, additional spending on foreclosed homes and a decrease in property values due to the multiple foreclosures.

The city is asking that the court rule that the banks — JPMorgan Chase, Wells Fargo, Citigroup and Bank of America — violated the Fair Housing Act, award the city unspecified damages, and enter a permanent injunction against the banks and their employees to prevent the alleged violations and discriminatory behavior.

The banks deny any wrongdoing.

The suit was filed in federal court in Miami on June 13 by a group of lawyers who also sued, in similar cases, on behalf of the cities of Miami and Los Angeles last December. Miami sued Wells Fargo, Citigroup and Bank of America, while Los Angeles sued all four banks. Those cases all remain open.

Although the federal cases in Los Angeles and Miami are ongoing, the banks have had to pay up in the past.

In 2012, Wells Fargo settled in a case brought against them by the Justice Department. The bank paid $175 million to thousands of borrowers across the country, including about 4,100 in the city of Miami, but admitted no wrongdoing.

Bank of America paid $335 million to settle a Justice Department discrimination suit in 2011 after allegations that the bank’s Countrywide Financial unit, which denied the allegations, charged higher fees and rates to minorities from 2004 to 2008.

Miami Gardens’ complaint alleges that as far back as 2004, the banks engaged in red-lining practices, or denying credit to certain neighborhoods based on their racial makeup; as well as reverse redlining, or offering a large number of predatory loans in predominantly minority neighborhoods where the banks knew the borrowers could not afford them.

The complaint said that, from 2004-2012, a black borrower in Miami Gardens was about three times as likely to receive a predatory loan even if their credit-worthiness was similar to a white borrower. For Hispanic borrowers in the city, it was four times as likely.

The banks said Miami Gardens’ suit is unfounded.

Tom Goyda, a Wells Fargo spokesman, said in a statement that Miami Gardens’ accusations are “baseless.”

“The lawsuit filed by Miami Gardens against Wells Fargo does not have merit, and it is disappointing that the city chose this course of action rather than a collaborative approach to help borrowers and homeowners,” Goyda said in a statement.

Bank of America argues, in its motion to dismiss Miami’s lawsuit, that other factors during the country’s financial crisis played a major role and that others may have been at fault.

“The complaint does not even mention the recent deep recession, drop in housing prices, or high unemployment rates as having to do with the problems of which the city complains,” the motion read. “Nor does the complaint acknowledge that hundreds of other lenders made hundreds of thousands of other loans to city residents during the same time.”

The banks’ motions to dismiss the Miami cases remain pending.

Miami Gardens said that it chose to focus on the four banks it is suing because city leaders believe they were the major cause for the city’s drop in property value.

“These were the banks that were giving out the most mortgages in our city, and that’s why they were chosen,” said Darian Martin, assistant to the city manager.