JPMorgan Chase charged with making predatory loans to Black homeowners
23rd June 2014 · 0 Comments
By Frederick H. Lowe
(Special from The NorthStar News & Analysis) — JPMorgan Chase & Co., the world’s largest bank based on assets, stuck Black homeowners with predatory, or high-interest mortgage loans, that resulted in quick foreclosures, according to a lawsuit filed Friday in U.S. District Court in Miami.
The 58-page lawsuit, titled City of Miami v JPMorgan Chase & Co., charged that the New York-based bank and its entities, including JPMorgan Chase Bank N.A., JPMorgan Chase and Chase Manhattan Bank USA, N.A., reported that the average time for foreclosure involving African-American borrowers was 2.627 years. This compares to 2.714 years for Hispanic borrowers and 3.037 years for white borrowers.
”These statistically significant disparities demonstrate that JPMorgan aggressively moved minority borrowers into foreclosure as compared with the how the bank handled foreclosures for white borrowers,” according to the lawsuit.
When the payments were too expensive for the beleaguered borrower to pay, JPMorgan Chase refused to refinance the loans, the lawsuit alleges.
The City of Miami charged in its lawsuit, which was filed in the U.S. District Court for the Southern District of Florida, that JPMorgan Chase violated the U.S. Fair Housing Act of 1968 through a practice of illegal and discriminatory mortgage lending since 2004 that destroyed neighborhoods and caused the city to lose property taxes.
The lawsuit charged that JPMorgan Chase engaged in reverse redlining in Miami’s African-American and Hispanic neighborhoods that consisted of high cost and abusive mortgage loan products with predatory terms compared to the mortgage loans issued to white borrowers, which was reverse redlining.
”JPMorgan’s pattern and practice of reverse redlining has caused an excessive and disproportionately high number of foreclosures on JPMorgan Loans it has made in minority neighborhoods of Miami,” the lawsuit alleged. “Foreclosures on loans originated by JPMorgan are concentrated in these neighborhoods. A loan in a predominantly minority neighborhood is 4.629 times more likely to result in foreclosure than a loan in a neighborhood with minority white residents.”
To bolster the city’s allegations, Miami has confidential witnesses (CWs), who were former JPMorgan Chase employees. The confidential witnesses were responsible for making, processing and underwriting loans in the greater Miami region.
”The CWs describe how JPMorgan and Washington Mutual, a Seattle thrift taken over in 2008 by JPMorgan Chase, targeted minorities and residents of minority neighborhoods in and around Miami for predatory lending practices,” the lawsuit charges.
The City of Miami is seeking a jury trial and it wants the judge to enjoin JPMorgan Chase from its discriminatory conduct. In addition, Miami is seeking compensatory and punitive damages. A JPMorgan Chase spokesman said through other media outlets the charges are without merit.
This article originally published in the June 23, 2014 print edition of The Louisiana Weekly newspaper.