- POSTED: 31 May 2014 07:15
Los Angeles filed suit against JP Morgan Chase, saying the US bank pushed minorities into higher risk loans they couldn't afford, helping trigger the foreclosure crisis.
LOS ANGELES: Los Angeles filed suit on Friday against JP Morgan Chase, saying the US bank pushed minorities into higher risk loans they couldn't afford, helping trigger the foreclosure crisis.
The city is trying to recover damages for decreased tax revenues, arguing the rash of foreclosures caused property values to drop, and for the extra money it spent on city services because of the foreclosures.
"LA continues to suffer from the foreclosure crisis - from blight in our neighbourhoods to diminished revenue for basic city services," City Attorney Mike Feuer said in a statement.
"We're fighting to hold those we allege are responsible to account and to help bring back every community in our city."
The "mortgage discrimination" in effect since 2004, imposed "different terms or conditions on a discriminatory and legally prohibited basis," according to the lawsuit filed in federal court.
It did not specify a requested amount for damages
The latest court action follows similar complaints against Wells Fargo, Bank of America and Citigroup in December.
Like the other banks, JP Morgan denied the charges.
Company spokesman Jason Lobo said the bank would "vigorously" defend itself against the lawsuit.
"We are disappointed the LA city attorney is pursuing an adversarial approach to address city finances impacted by the recent economic downturn," Lobo added, arguing the downturn "was beyond our control."
LA accuses the bank of refusing to issue mortgages to minority borrowers, while approving a white borrower with a similar credit history for the loan.
It also says the bank pushed minority borrowers into "high-cost and abusive mortgage loan products with predatory terms as compared to the mortgage loans issued to white borrowers."
These practices "have the purpose and effect of placing vulnerable, underserved borrowers in loans they cannot afford," the lawsuit says.