The Bank of America building is shown in Los Angeles, California

Judge tosses L.A’s mortgage discrimination suit against BofA

By Dena Aubin

(Reuters) – A federal judge has thrown out a lawsuit by the city of Los Angeles accusing Bank of America of discriminatory mortgage lending, ruling that the municipality had offered no evidence that it was harmed by the bank.

In a ruling made public on Thursday, U.S. District Judge Percy Anderson said Los Angeles lacked standing to sue under the U.S. Fair Housing Act, which requires proof of a “concrete injury.”

Filed in 2013, the lawsuit accused Bank of America and its Countrywide Home Loans unit of violating that anti-discrimination act by making loans to minorities on worse terms than those offered to whites. It said the bank then refused to refinance them on fair terms, causing foreclosures and neighborhood blight.

Loans issued by the bank in Los Angeles’s minority neighborhoods were more than four times more likely to result in foreclosure than those issued in white neighborhoods, the lawsuit said.

Bank of America said in a statement it was pleased with the decision. The bank said it responded “with urgency” to rising mortgage defaults caused by the economic downturn in the United States.

The city’s lawsuit sought damages for lost property tax revenue and increased costs of municipal services in neighborhoods hit by foreclosures.

A spokesman and lawyers for the city could not immediately be reached for comment.

The complaints are among a wave of lawsuits against major lenders over mortgages lending practices before the 2007 housing collapse.

Similar lawsuits filed by Los Angeles against JPMorgan Chase & Co, Citigroup Inc and Wells Fargo & Co since December 2013 are still pending. All three banks have defended their records of fair lending.

In court filings, Bank of America labeled “absurd” the city’s allegations that its conduct caused massive foreclosures in minority neighborhoods. The city’s claims ignored other causes of foreclosures, including the last recession, unemployment and the housing collapse, the bank argued.

Bank of America had also disputed the city’s standing to sue under the Fair Housing Act, which was meant to protect individuals from discrimination and which limited claims to “an aggrieved person.”

The city had argued it had standing under the act because it had an interest in ensuring that its citizens were free from housing discrimination.

The case is City of Los Angeles v. Bank of America Corp et al, U.S. District Court, Central District of California, No 13-cv-9046

(Reporting by Dena Aubin in New York; Editing by David Ingram and Grant McCool)


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