Miami can sue big banks for predatory lending

miami banks

The U.S. Supreme Court ruled Monday that the city of Miami can sue some of the nation’s largest financial institutions over allegations that predatory lending practices in minority communities violated the Fair Housing Act and contributed to a real estate meltdown that nearly bankrupted the city.

The high court, by a 5-3 decision, said the city has standing to sue banks that elected leaders blamed for a wave of foreclosures that undercut Miami’s tax base in the late 2000s. The city, which was forced to patch a more-than $100 million budget shortfall following the real estate bust of 2008, sued Wells Fargo, Bank of America, JPMorgan Chase and CitiGroup in 2013.

A trial judge tossed the lawsuits in 2014, and that decision was overturned by the U.S. Court of Appeals for the 11th Circuit. On Monday, six months after hearing oral arguments on cases brought by Wells Fargo and Bank of America, the high court sided with the city.

And yet, the justices also vacated the portion of the 11th Circuit’s ruling that the city had sufficiently argued that the banks’ activities can be blamed for the city’s financial problems on the basis that the fallout should have been foreseeable. They directed the court to reassess that issue.

“The remaining question is one of causation: Did the Banks’ allegedly discriminatory lending practices proximately cause the City to lose property-tax revenue and spend more on municipal services?” asked Justice Stephen Breyer.

Still, elected officials in both Miami and Miami Gardens, which has its own predatory cases pending against the same banks, celebrated Monday’s decision. Miami Commissioner Francis Suarez, a real estate attorney who pushed the city to file suit against the banks back in 2013, said the city can either move to continue litigating the case or talk settlement now that it has greater leverage.

“Every citizen in the city should be proud that the city fought on its behalf and that we’ve tried to undo some of the injustice done by these banks,” Suarez said.

Miami Gardens Mayor Oliver Gilbert said the court’s decision validated the city’s decision to sue in 2014. He plans to meet with City Attorney Sonja Knighton-Dickens and their outside legal counsel tomorrow to discuss next steps. Miami Gardens has been in a holding pattern with their lawsuit based on the city of Miami’s case.

“We made the argument that the city of Miami Gardens and its 112,000 residents could make the case against banks that had bad practices that were sure to cause foreclosures and diminish property values,” Gilbert said. “We said that we could state that case and the court said we have that right.”

Copyright © 2017 Miami Herald, Lance Dixon and David Smiley, The Miami Herald. Distributed by Tribune Content Agency, LLC.

Read more here…