The City of Los Angeles in California has filed charges against Bank of America for discriminatory mortgage lending, a Reuters report said. The lawsuit, filed in a US federal court in California, alleged that the lender practiced discriminatory mortgage lending among the city's minority communities.
The court filing by City Attorney Michael Feuer said that since at least 2004, Bank of America was said to have been engaged in a continuous pattern and practice of mortgage discrimination. Reuters said that a spokesman for Bank of America was not immediately available for comment.
The lawsuit further alleged that the lender's discriminatory practices led to a spate of foreclosures in the city's minority neighborhoods. This dented the property tax revenues of the city and caused the need to increase the city services, Reuters reported. The lawsuit asked for damages, including payment for revenue lost, for the alleged discriminatory practices of the bank.
In addition, the complaint also alleged that the terms on mortgage credit extended by Bank of America to borrowers from the minority group were not equal to that of other borrowers or that credit was extended on predatory terms. This practice made vulnerable borrowers obtain loans that they could not afford, according the lawsuit. This also included subprime loans.
In August this year, the Merrill Lynch unit of Bank of America Corp settled a discrimination lawsuit against African-American financial advisers. The settlement amount was USD 160 million.
Other Wall Street lenders are also in the middle of multiple legal battles about their mortgage lending practices, Reuters reported. Bank of America recently said it would be paying USD 404 million to Freddie Mac. The settlement would cover the liabilities on home loans the lender sold the mortgage company controlled by the US government.
According to Reuters, similar lawsuits have also been filed against two lenders, Citigroup Inc and Wells Fargo. However, Reuters talked with spokeswomen from both banks who said that the charges did not have merit.
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