The city of Miami claims in a new lawsuit that JPMorgan Chase & Co. engaged in discriminatory lending practices for years that worsened the foreclosure crisis in minority neighborhoods during the last decade's housing crisis.
The lawsuit, filed on Friday in federal court in Florida, said the country's largest bank engaged in an ongoing practice of predatory mortgage lending since at least 2004, violating the U.S. Fair Housing Act.
The city says loans were disproportionately made in black and Hispanic neighborhoods with burdensome terms, leading to a far greater rate of foreclosures. After issuing high-cost loans to minorities in the years before the housing crisis, JPMorgan later refused to refinance the loans on the same terms as it extended to whites, leading to defaults and foreclosures, the complaint states.
Miami is seeking unspecified damages and an order banning JP Morgan from continuing to make racially discriminatory loans. Bank officials have stated the lawsuit has no merit and that JP Morgan has a healthy record of providing housing to low- and moderate-income families in South Florida.
Reuters and Associated Press first reported news of the lawsuit.
Miami, as well as Los Angeles, in December sued Wells Fargo & Co, Citigroup Inc. and Bank of America Corp. for allegedly giving minorities home loans they could not afford, resulting in huge defaults, Collections & Credit Risk reported. The banks contested the claims, saying they have records as responsible lenders. Wells Fargo and Citigroup recently lost bids to have their lawsuits tossed. The status of the suit against Bank of America was not immediately clear.
Florida, and Miami in particular "have been devastated by the foreclosure crisis. As of October 2013, Florida has the country's highest foreclosure rate, and Miami has the highest foreclosure rate among the 20 largest metropolitan statistical areas in the country," according to the lawsuits filed against Wells Fargo, Citigroup and Bank of America.