The city of Miami has sued Bank of America, Citibank and Wells Fargo in U.S. federal court in Florida, for discriminatory mortgage lending practices against minority residents that resulted in a rash of foreclosures, city officials said Thursday.
The lawsuits accuse the banks of "redlining" or refusing to grant mortgage credit to minority borrowers on equal terms as what's offered to other borrowers. It said the practices placed vulnerable borrowers in loans they could not afford, including subprime loans.
The lawsuits, filed on December 13, claim the banks engaged in a "pattern and practice of mortgage discrimination in Miami" since at least 2004 in violation of the U.S. Fair Housing Act of 1968.
Florida, and Miami in particular "have been devastated by the foreclosure crisis. As of October 2013, Florida has the country's highest foreclosure rate, and Miami has the highest foreclosure rate among the 20 largest metropolitan statistical areas in the country," the lawsuits said.
The lawsuits seek damages including lost tax revenue and the costs of repairing and maintaining properties that went into foreclosure.
A spokesman for Wells Fargo said the bank was disappointed in the city's decision to proceed with what it called "baseless allegations".
A spokesman for Citigroup said the lawsuit was "without merit," adding that it was disappointed that Miami officials do "not recognize our deep commitment to fair lending."
Bank of America said it had a strong track record for fair lending, in a statement. "When the country's severe economic downturn peaked, and our customers were affected with personal financial hardships...we responded urgently with the solutions to assist them."
But the lawsuits state that the banks' practices led to a wave of foreclosures in minority neighborhoods, undermining the city's property tax revenues.
"While these banks were generating substantial revenue from the issuance of predatory mortgages, the City of Miami was losing significant revenue and incurring costs that have not been reimbursed," the city said in a statement.
Major banks are fighting multiple legal battles related to mortgage lending. Los Angeles filed similar complaints against the banks earlier this month.
Also in December, Bank of America said it would pay $404 million to Freddie Mac to resolve liabilities on home loans sold to the government-controlled mortgage company.
The cases in the U.S. Southern District of Florida are City of Miami vs. Bank of America Corp, Bank of America N.A., Countrywide Financial Corp., Countrywide Home Loans, Countrywide Bank, FSB, et al; City of Miami vs. Wells Fargo & Co., and Wells Fargo Bank, N.A et al; City of Miami vs. Citigroup Inc, Citibank N.A., Citimortgage Inc., Citi Holdings Inc., and Citicorp Trust Bank, FSB.