Supremes To Hear Predatory Lending Cases

Big Banks Predatory Loans

The Supreme Court has agreed to make a decision on whether the city of Miami can pursue its Fair Housing Act claims against several big banks of predatory mortgage loans.

The Courthouse News Service reported on Tuesday (June 28) that the high court will not only decide if the city’s FHA lawsuits against Wells Fargo, Bank of America and Citigroup for allegedly targeting minorities with predatory loans can still stand, but also if the claims are barred by the statute of limitations.

A federal judge initially dismissed the city’s individual lawsuits against each bank, citing that it lacked merit because the claims fell outside of the Fair Housing Act’s “zone of interests.”

But the 11th Circuit court eventually reversed the decision last September, allowing Miami to continue on with its FHA claims.

“Because the district court imposed too stringent a zone of interests test and wrongly applied the proximate cause analysis, we conclude that it erred in dismissing the city’s federal claims with prejudice and in denying the city’s motion for leave to amend on the grounds of futility,” Judge Stanley Marcus wrote for the appeals court.

The banks then petitioned for a review by the U.S. Supreme Court earlier this year, stating:

“The city did not buy a house or take out a mortgage, and it did not experience any racial discrimination or even any actionable ‘disparate impact.’ Nor does it contend that its neighborhoods have become more or less segregated or that any ‘discriminatory housing practice’ was visited upon it.”

According to the Courthouse News Service, both Bank of America and Wells Fargo have accused the City of Miami of using the FHA claims to force the banks to replace property-tax revenue as a result of the financial crisis that took place during the late-2000s.

“This case, and the host of copycat cases like it … is a perfect example of how a civil-rights statute can be ill used by plaintiffs seeking a money recovery that Congress never meant to award them,” the banks stated.


Latest Insights:

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. In the December 2019 Mobile Card App Adoption Study, PYMNTS surveyed 2,000 U.S. consumers for a reveal of the four most compelling features apps must have to engage users and drive greater adoption.

Click to comment