Credit: AP Photo/Ross D. Franklin
The city of Miami filed a lawsuit against JPMorgan Chase & Co. on Friday for allegedly causing a wave of foreclosures in the community by participating in predatory mortgage lending.
According to Reuters, Miami is leading the major U.S. cities in numbers of foreclosures, and the city now thinks JPMorgan’s practices contributed to the major housing crisis.
According to the lawsuit, JPMorgan offered high-cost loans to African-American and Latino homeowners and then later refused to refinance the loans after the housing crisis hit.
White homeowners, on the other hand, were allegedly given better terms for the loans and had no need to refinance during the housing crisis.
Eventually a wave of foreclosures plagued Miami and the city claims it was forced to spend extra resources to combat the negative effects of so many foreclosures, including crime and gang activity at the foreclosed properties.
The lawsuit also pointed out that the loans offered in predominantly minority communities in Miami were nearly five times more likely to result in foreclosures than the loans offered in predominantly white neighborhoods.
A spokesman for JPMorgan Chase & Co. denies all accusations of discrimination and said the lawsuit has no merit.
“The Miami City Attorney’s claims are baseless and stand contrary to our long record of providing affordable housing to low- to moderate-income families across the region,” said Jason Lobo, the spokesman for JPMorgan. “The bank will defend itself against the claims.”
JPMorgan is currently the largest bank in the U.S. with assets valued at well over $2 trillion.
This is not the first city to file a lawsuit of this type against the bank.
The city of Los Angeles filed similar claims against JPMorgan a few weeks ago.
The lawsuit from LA is seeking damages for “lost tax revenue and increased city services needed in blighted neighborhoods,” Reuters reported.
Wells Fargo & Co., Citigroup Inc. and Bank of America Corp. were also hit with similar lawsuits from L.A. and Miami.
Both cities claim these banks offered minorities home loans that they clearly were not able to afford which caused large numbers of defaults.
All the banks named have contested the lawsuits, making the same claim as JPMorgan – they are responsible lenders and had no part in discriminatory lending.
JPMorgan shares are down 0.2 percent and now stand at $56.91.
