(Adds other cities' lawsuits, paragraphs 8-9)
By Jonathan Stempel
May 30 The City of Los Angeles has sued JPMorgan
Chase & Co, accusing the largest U.S. bank of engaging
in discriminatory mortgage lending practices that drove up
foreclosures among minority borrowers.
The lawsuit on Friday is part of the second most populous
U.S. city's effort to hold mortgage lenders liable for lost
property tax revenue caused by falling home values, and the cost
to maintain vacant foreclosed properties.
"LA continues to suffer from the foreclosure crisis - from
blight in our neighborhoods 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."
The complaint filed in Los Angeles federal court accused
JPMorgan of engaging in a "continuous pattern and practice of
mortgage discrimination" in the city since 2004.
It said the New York-based bank's practices included
redlining, where minority borrowers are denied credit on the
same terms as other borrowers, and reverse redlining, where
borrowers in minority neighborhoods are flooded with subprime
loans they cannot afford despite qualifying for better terms.
"We are disappointed the L.A. City Attorney is pursuing an
adversarial approach to address city finances impacted by the
recent economic downturn," JPMorgan spokesman Jason Lobo said in
a statement. "The downturn was beyond our control." The bank
said it would defend itself against the lawsuit.
Los Angeles in December filed similar lawsuits against Bank
of America Corp, Citigroup Inc and Wells Fargo &
Co, the next three largest U.S. banks. Wells Fargo on
Wednesday lost its bid to dismiss its lawsuit.
Cook County, Illinois, which encompasses Chicago, has filed
similar lawsuits against Bank of America and HSBC Holdings Plc
, while Providence, Rhode Island on Thursday sued a unit
of Spain's Banco Santander SA.
Baltimore, Cleveland and Memphis, Tennessee are among other
cities to bring similar cases against banks. Atlanta-area
counties have also sued HSBC.
Los Angeles said JPMorgan loans made from 2004 to 2011 in
predominantly black or Latino neighborhoods were 2.19 times more
likely to go into foreclosure than loans in mainly white areas.
It said loans to minority borrowers went into foreclosure
Part of the case was based on confidential statements from
former JPMorgan employees.
One, a former mortgage loan officer, accused the bank of
refusing to help struggling borrowers, and instead often "just
waiting for the sheriff to come around" and foreclose.
There were about 200,000 foreclosures in Los Angeles from
2008 to 2012, causing the loss of $78.8 billion in home values,
the complaint said.
Last June, Deutsche Bank AG settled a lawsuit in
which Los Angeles accused it of letting hundreds of foreclosed
properties deteriorate into slum conditions.
The case is City of Los Angeles v. JPMorgan Chase & Co et
al, U.S. District Court, Central District of California, No.
(Reporting by Jonathan Stempel in New York; Editing by Grant