Saturday, May 06, 2017

20.1 - Good News: cities can sue banks for housing discrimination

Good News: cities can sue banks for housing discrimination

Let's start, as we always like to, with some Good News. This time we actually start with a sort of Good News-Bad News sort of thing.

In 2013, the city of Miami sued Bank of America and Wells Fargo, charging that their practice of targeting black and Latino homeowners for riskier, less favorable mortgages ultimately drove a wave of defaults and foreclosures producing a fall in property values in the city, cutting city revenue even as the city had to spend more money to deal with a rash of blighted or abandoned homes.

The Good News is that on May 1, the Supreme Court ruled 5-3 that yes, the city of Miami can be an "aggrieved person" under the Fair Housing Act and so can sue the banks.

The bad news is that the bar for the city to prove damages under the law will be high because of the difficulty of showing that the banks' lending practices were the "proximate cause" of the city's losses. Because so many economic and social issues can affect the value of the city's housing stock, it can be hard to tease out what effect the banks' policies had.

But even so, establishing the principle that cities can be victims of bank-driven housing discrimination, adding a weapon, even if a weak one, to the arsenal that can be wielded against the banks, has to be considered Good News.

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