A federal judge rejected Bank of America Corp's
request to dismiss a lawsuit in which Cook County,
Illinois, accused the lender of targeting black and Hispanic
borrowers in the Chicago area with subprime mortgages.
In a decision dated Thursday, U.S. District Judge Elaine
Bucklo in Chicago said Cook County could pursue allegations that
the bank steered minority borrowers into an outsized number of
high-cost home loans, resulting in more foreclosures, lower
property taxes and greater urban blight.
"The county has asserted an adequate injury-in-fact that is
plausibly connected to defendants' alleged discriminatory
lending," Bucklo wrote. She did not rule on the case's merits.
Cook County, the nation's second most populous county after
Los Angeles, had accused Bank of America of "reverse redlining,"
in which credit is often extended on unfair terms in specific
geographic areas based on borrowers' race, ethnicity or income.
The county said Bank of America made about 95,000 home loans
to minority borrowers on less favorable terms than loans to
similar white borrowers, and that about 60 percent of the loans
in question were or could prove at risk of default.
Bank of America in a statement said, "The factual and legal
issues in this case will be very complex," adding that its
record "demonstrates a firm commitment and strong record for
fair and responsible lending and community revitalization."
The Charlotte, North Carolina-based bank sought to dismiss
the case on the grounds that Cook County lacked standing, waited
too long to sue, and did not show violations of the federal Fair
Bucklo noted that the U.S. Supreme Court is expected to
decide by June whether to narrow the scope of discrimination
claims made under that law, and that its
decision could affect Cook County's case.
Cook County's lawsuit is one of many in which municipalities
such as Los Angeles, Baltimore, Cleveland and Providence, Rhode
Island, have sought to hold mortgage lenders responsible for
mounting foreclosures. Cook County last March also brought one
such case against HSBC Holdings Plc.
The case is County of Cook v. Bank of America Corp et al,
U.S. District Court, Northern District of Illinois, No.