The city of Los Angeles filed a lawsuit against Bank of America (BAC) Friday, accusing the company and its Countrywide unit of engaging in discriminatory mortgage lending.
Bank of America "not only refused to extend credit to minority borrowers when compared to white borrowers, but when the bank did extend credit, it did so on predatory terms," according to a complaint filed by City Attorney Mike Feuer in U.S. Federal Court.
The complaint alleges that Countrywide charged African-American and Hispanic borrowers higher fees and costs beginning in at least 2004. Bank of America acquired Countrywide in 2008.
Bank of America also denied minority borrowers the opportunity to refinance subprime mortgages, the complaint said. These practices allegedly contributed to a spike in foreclosures in L.A. neighborhoods. The resulting decline in property values has cost the city an estimated $481 million in property tax revenue in the wake of the housing crisis, according to a report cited in the complaint.
The city has also spent an estimated $1.2 billion on safety inspections, property maintenance and other expenses related to foreclosures, according to the complaint.
A Bank of America spokesman denied the allegations Monday, saying that "there is no basis for the city's claims."
"We have a firm commitment and strong track record for fair lending," the spokesman said in an email. "We responded with urgency to rising mortgage defaults that resulted from the country's severe economic downturn and the personal financial hardships unemployment and underemployment, divorce, and medical disability, chief among them - that resulted for so many Americans."
The city filed similar lawsuits against Citigroup (NYSE: C) and Wells Fargo (WFC) Thursday.