11th Circuit Revives City of Miami’s Mortgage Fraud Lawsuits Against Wells Fargo, Citigroup, and Bank of America

The 11th U.S. Circuit Court of Appeals said that a lower court made a mistake when it threw out the city of Miami’s claims accusing Bank of America Corp. (BAC), Wells Fargo & Co. (WFC ), and Citigroup Inc. (C) of engaging in predatory mortgage lending to Hispanic and black borrowers. The Florida city brought its claims under the Fair Housing Act.

Miami claims that the three banks directed non-Caucasian borrowers toward more expensive loans that were frequently not affordable to them even if their credit was good. The city said that because of this “reverse redlining,” there were a lot of foreclosures, a rise in spending to fight blight, and lower property tax collections.

A U.S. district court judge threw out Miami’s mortgage fraud lawsuits last year. Judge William Dimitrouleas claimed that the city did not have the standing to sue and the harm alleged was too remote from the conduct of the banks.

The 11th circuit, however, said that standard was too strict. It believes that the banks could have foreseen that there would be attendant harm from such alleged discriminatory practices.

In another case alleging discriminatory lending, M & T Bank Corporation (MTB) has arrived at a settlement over allegations brought by a number of Hispanic, African-American, South Asian, and white testers, as well as the Fair Housing Justice Center. The lawsuit was based on a two-year testing probe conducted by the FHJC. The testers, pretending to be prospective house buyers, asked loan officers to help them figure out what they could afford. The bank will pay $485,000 to the plaintiffs.

The lawsuit accused M & T Bank of putting into place racial criteria for one of its residential loan products. The plaintiffs claim that loan officers discriminated against them because of their nation of origin and race.

As part of the settlement, M & T Bank will no longer impose neighbourhood racial standards in its residential mortgage programs. It will also put into place a bank-wide policy barring steering, publish a revised fair lending policy on its website, and hire a consultant to modify its fair lending training for Bank employees, including loan officers.

Shepherd Smith Edwards and Kantas, LTD LLP is a securities fraud lawsuit. We represent high net worth individual investors and institutional investors with mortgage fraud lawsuits and other securities claims.

11th Circuit Revives Miami’s Case Against Mortgage Lenders, Daily Report Online, September 2, 2015

M&T Bank settles lawsuit claiming New York City lending bias, Reuters, August 31, 2015