In a recent lawsuit filed against JP Morgan, Los Angeles City Atty. Mike Feuer alleges that mortgage lenders swarmed into low-income minority neighborhoods with easy but deceptive offers of credit, targeting people ill-equipped to handle the economic burden. The fact that big banks practiced predatory mortgage and foreclosure practices isn’t debatable. Regulators and financial analysts came to the conclusion a while ago that these predatory practices thrived in the sub-prime mortgage market.
A New Aggressive Era
Though Feuer might not be telling a different story, his lawsuits are an effort to bring such discriminatory practices to an end as well as extract compensation for their effect on Los Angeles. These lawsuits may also be interpreted as a newly aggressive era for the city attorney’s office. Since taking office last July, Feuer has developed a vision of the city attorney office as an uber-regulatory agency that is cracking down on practices that harm the quality of life.
Feuer says his goal in filing the lawsuits against the banks — JPMorgan, Bank of America, Citigroup, and Wells Fargo — was not so much to land them in court as to bring them to the table. He says that before filing the lawsuits, he sent the complaints to the banks, hoping to settle amicably. “Obviously, that didn’t happen,” he says.
The Cost of the Foreclosure Practices
The city is charging that the banks’ predatory lending and discriminatory foreclosure practices caused a decline of nearly $79 billion in city property values. That in turn could lead to a loss of about $481 million in property tax revenue. “We are seeking to have existing rules enforced,” he says. “There should be enough rules in place to govern behavior so that one doesn’t encounter the same problem in the future.”
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Source: LA Times, City attorney takes aim at big banks, June 6, 2014