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L.A.’s Predatory Lending Case Survives Chase’s Challenge

LOS ANGELES (CN) - A federal judge last week declined to dismiss the city of Los Angeles' predatory mortgage lending lawsuit against JPMorgan Chase, adding to a string of favorable rulings in related cases against Wells Fargo, Citigroup and Bank of America.

Los Angeles City Attorney Mike Feuer sued Chase in May, claiming the bank's predatory lending in poor, minority communities reduced city property tax revenue and left taxpayers on the hook for maintenance of foreclosed homes. He estimated that the cost to the city was $1 billion.

Feuer filed similar actions against Wells Fargo, Citigroup, and Bank of America in December 2013, claiming the banks saddled minorities with loans they could not afford.

In August, U.S. District Judge Otis Wright granted a motion by JPMorgan Chase and its affiliates JPMorgan Chase Bank and Chase Manhattan Bank to dismiss L.A.'s complaint, finding that the city's claims are barred under the Financial Institutions Reform, Recovery, and Enforcement Act, or FIRREA.

After the judge invited the city to file an amended complaint, Chase filed a "similar, if not identical" motion to those that have already been denied in the three other cases against the banks earlier this year.

"The court finds no reason to deviate from the rulings in the related cases," Otis wrote in his Nov. 14 order.

L.A.'s analysis of publicly available data was sufficient for the claims to move forward, the judge said.

The city said that from 2004 to 2011, black borrowers were more than two-and-a-half times more likely to receive a bad mortgage loan than whites. Borrowers in black and Latino neighborhoods were more than five times as likely to find themselves under water after securing a Chase loan than in white neighborhoods, and Latino borrowers were more than four times as likely to receive a loan that ended in foreclosure, the amended complaint says.

Because the city alleges a continuous "unbroken, eight-year pattern and practice of discrimination with respect to Chase's discriminatory lending," its claims are timely, Wright found.

"Where a plaintiff challenges not merely a single incident of conduct that violates the Fair Housing Act, but rather a pattern or practice of discrimination, the statute of limitations runs from the last asserted occurrence," Wright wrote.

The city's complaint is "rife with allegations that Chase targeted minority borrowers by offering unfair loan terms," the judge added, thereby establishing a pattern of discrimination under the Fair Housing Act.

Ruling that the city may seek restitution in the case, Wright gave Chase 14 days to respond to the amended complaint.

Neither the city nor Chase immediately responded to requests for comment.

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