It’s Alive! Bank Of America Ghetto Loans Lawsuit Brought Back From The Dead

The Bank of America Ghetto Loans lawsuit filed by the City of Miami is going into litigation. A federal appeals court revived the Bank of America Ghetto Loans lawsuit. The lawsuit accuses Bank of America and two other lenders of giving “ghetto loans” to Black and Hispanic borrowers.

Normally, Bank of America has been off the radar of housing advocates. Now, housing advocates are pressuring local municipalities into suing the major banks over ghetto loans.

Dozens of American cities who have also sued Wells Fargo and other lenders. They allege Wells Fargo steered non-white borrowers into higher-cost loans they often couldn’t afford. However, Baltimore, Chicago, Cleveland, Los Angeles and Memphis have met with mixed success suing lenders over ghetto loans. These loans have also left their cities in chaos. Consequently, these municipalities were encouraged by Baltimore receiving a $175 million in damages from Wells Fargo. 

11th Circuit Court Of Appeals Has Laid Down The Law

The City of Miami alleges these ghetto loans led to a large number of foreclosures. Thus, lowering property tax collections and increased spending to combat urban blight.

A 3-0 vote, the 11th U.S. Circuit Court of Appeals said a lower court erred in dismissing the claims of the Miami’s Bank of America Ghetto Loans lawsuit under the federal Fair Housing Act, over what Miami called decades of lending discrimination residential loans given to Blacks and Hispanics.

Circuit Judge Stanley Marcus wrote on behalf of the majority, “It is clear that the harm the city claims to have suffered has a sufficiently close connection to the conduct the statute prohibits.” 

However, in July 2014, U.S. District Judge William Dimitrouleas in Fort Lauderdale, Florida dismissed Miami’s Bank of America Ghetto Loans lawsuit claiming the city lacked standing and that the city did not offer enough evidence to support their claims that ghetto loans caused these problems.

The 3-person panel on the appeals court said that standard was too stringent and that banks could have reasonably foreseen the “attendant harm” from their alleged discriminatory lending. The 11th Circuit did not rule on the merits.

Below is the 11th Circuit COA’s ruling:

Miami v Bank of America Appellate Decision