BofA Dodges LA’s Predatory-Lending Suit

     LOS ANGELES (CN) – A federal judge has dismissed Los Angeles’ predatory lending lawsuit against Bank of America, finding the city failed to support its claims with concrete evidence.
     U.S. District Judge Percy Anderson issued the ruling against the city of Los Angeles this past week in an 8-page order for Bank of America, Countrywide Financial, and Countrywide Home Loans.
     Bank of America acquired Countrywide for $4.1 billion in 2008, at the height of the financial crisis.
     “What the court suspected at the pleading stage has become apparent on defendants’ motions for summary judgment: the city has no evidence that it has suffered any damages as a result of defendants’ allegedly discriminatory loans,” Anderson wrote in the May 11 ruling.
     Los Angeles City Attorney Mike Feuer has headed several lawsuits against big banks, filing similar court actions against Wells Fargo, Citigroup and Chase. Those claims are still pending.
     Feuer claimed that the predatory lending practices of the banks in minority communities reduced city property tax revenue and left taxpayers to foot the bill for maintenance of foreclosed homes. The estimated cost to the city was $1 billion.
     Bank of America spokesman Rick Simon said the bank is pleased with the court’s ruling.
     “We responded with urgency to rising mortgage defaults that resulted from the country’s severe economic downturn, which the Los Angeles suit ignored, providing unprecedented assistance to customers who have suffered personal financial hardships,” Simon wrote in an emailed statement. “We continue to work with government agencies and nonprofit organizations to revitalize neighborhoods”
     In a legal move Anderson described as “bait-and-switch litigation,” LA sought to avoid dismissal by abandoning claims based on decreased property taxes and costs of maintenance.
     In opposing court papers, the city asserted a new theory instead: the banks had harmed the LA’s interest in making sure its residents are protected from housing discrimination.
     But Anderson said that claim failed because the city offered no evidence to support standing under the Fair Housing Act.
     In addition, Anderson ruled that the city’s claim of unjust enrichment against the banks failed because it identified only two foreclosures stemming from the banks’ alleged practices.
     With “no evidence that those properties remained vacant,” Anderson wrote, “and the current health of the housing market making such vacancies from future foreclosures unlikely, there simply is no evidence in support of these anticipated costs or the likelihood that they will be incurred.”
     LA spokesman Frank Mateljan declined to comment other than to say the city is reviewing the ruling.

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