Publisher's Opinion-

May 2017 Edition
Cities Can Sue Predatory Lenders

It was recently announced that the United States Supreme Court ruled that communities can sue banks over discriminatory lending practices that injured low-income communities during the past recession.
The ruling expands on the federal housing law handing cities a serious weapon against predatory lending practices that may have contributed to the foreclosure crisis back in 2008.
Prior to this ruling, the law was interpreted as applying directly to individuals who suffered hardships and not their communities.
The ruling clears the way for the City of Miami to file suit against two major banks it claims violated the civil rights law by intentionally targeting lower income neighborhoods with predatory loans programs. These programs lead to massive foreclosures when borrowers couldn’t pay off the loans. The result was many forced vacancies which caused the city great loss of property tax revenue.
At present, Los Angeles and San Francisco also have lawsuits pending against banks citing similar reasons. This ruling may open the doors to other cities filing suits.
The Supreme Court voted 5 to 3 in favor of extending the banks’ liability beyond the injured individual to the cities they live in. Justices Kennedy, Alito, and Thomas voted to throw the suit out. Thomas clarified his vote saying the anti-bias law should be limited to the people who were victims of discrimination and not the cities.
Voting in favor of the suit, Justice Breyer said, “We conclude that the city’s financial injuries fall within the zone of interests that the Fair Housing Act protects. It is true the housing market causes ripples to flow through the city’s economy. But for a city to win damages, it must prove some direct relation between the predatory lending and its effect on the city’s coffers.”
Anyway you look at it, the cities still have the burden of proof that a bank used predatory loans and in addition must prove the damage the city experienced due to the revenue loss.
We are now working on our June Industrial Issue. We will see you then.

by Roger Krieg
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