LA Sues Bank of America for Causing Home Foreclosures That Depressed Local Tax Revenue

The city adds Bank of America as a defendant in a case that already includes Wells Fargo and Citigroup.

Credit: Bank of America
Credit: Bank of America

Bank of America has been sued by the Los Angeles city attorney, joining Citigroup and Wells Fargo as defendants in lawsuits charging they caused a "wave" of home foreclosures that cost the City of Los Angeles more than $1 billion dollars and depressed local tax revenue, a spokesman said Saturday.

The City Attorney's Office late Friday filed a federal court lawsuit.

Bank of America now stands with Citigroup and Wells Fargo, accused of driving up demand for city services -- causing the city to spend $1.2 billion more than it should have -- and reducing the city's share of property tax revenue.

Bank representatives could not be reached last week for comment.

City Attorney Mike Feuer said Thursday he wanted to send a "firm message" that the city will "use every tool at our disposal to fight for all Los Angeles taxpayers and neighborhoods."

"Today we begin to address the devastating consequences of the foreclosure crisis in America's second largest city," he said.

City attorneys contend the banks engaged in a "continuous pattern and practice of mortgage discrimination in Los Angeles since 2004 by imposing different terms or conditions on a discriminatory and legally prohibited basis."

Minority borrowers received the bulk of "predatory" subprime loans and paid higher broker fees and costs, city attorneys said, leading to a "disproportionate" number of foreclosures in Los Angeles' minority neighborhoods.

The Los Angeles area saw around 200,000 foreclosures between 2008 and 2012, with home values falling $78 billion during that period, according to a report prepared by the Alliance of Californians for Community Empowerment and the California Reinvestment Coalition, attorneys said.

Property tax revenue in Los Angeles dropped $481 million in that same period, according to the report.

Meanwhile, the city of Los Angeles spent an additional $1.2 billion providing city services such as safety inspections, police and fire calls, trash removal and property maintenance, according to city attorneys.

- City News Service


More »
Got a question? Something on your mind? Talk to your community, directly.
Note Article
Just a short thought to get the word out quickly about anything in your neighborhood.
Share something with your neighbors.What's on your mind?What's on your mind?Make an announcement, speak your mind, or sell somethingPost something
See more »