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LA sues JPMorgan over 'predatory' mortgages

LA sues JPMorgan over 'predatory' mortgages

The US city of Los Angeles filed a lawsuit on Friday accusing JPMorgan Chase & Co. of channelling minority borrowers into risky home loans, according to the Los Angeles Times.

In a lawsuit filed last Friday in the US District Court, the Los Angeles city attorney alleged the nation's largest bank “has engaged in a continuous pattern and practice of mortgage discrimination in Los Angeles since at least 2004 by imposing different terms or conditions on a discriminatory and legally prohibited basis", the US paper reported.

Rockwell Olivier’s Sydney principal Chris Kintis, who specialises in commercial dispute resolution, said the case provides lessons for government authorities in Australia when examining the conduct of third parties to see if action could be taken.

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“I think the larger litigation is well and truly in Australia and has been for some time now,” Mr Kintis said.

“Locally, what we have seen for a number of years is closer scrutiny of losses and, looking outside of mortgages, I think the shareholder class actions are examples of close scrutiny of transactions, comments, statements, and what’s not said to the marketplace,” he said.

“The availability of funding is a key driver to those large claims being prosecuted.”

The Los Angeles Times noted that the lawsuit is the latest in a city attempt to collect unspecified damages based on hits to city revenue from alleged discriminatory lending.

In a statement, JPMorgan vowed to “vigorously defend” itself against the city’s lawsuit filed on Friday.

“The facts don’t support their claims and are contradicted by our demonstrated commitment to minorities in the Los Angeles area,” JPMorgan spokesperson Jason Lobo said in a statement.

“We are disappointed the LA City Attorney is pursuing an adversarial approach to address city finances impacted by the recent economic downturn,” Mr Lobo said, adding that the downturn “was beyond our control”.

The JPMorgan suit cites a report from low-income advocacy groups that claimed the mortgage crisis resulted in 200,000 foreclosures in Los Angeles from 2008 through to 2012, a wave that depressed property values, and in turn, city property tax revenue by $481 million, according to the report.

Rockwell Olivier’s Mr Kintis said it was unusual for a government authority to take what almost appears to be representative action.

“It will be a complicated argument on losses and causation,” he said.

LA sues JPMorgan over 'predatory' mortgages
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