Cobb County, DeKalb County, and Fulton County, Georgia File Federal Fair Housing Act Lawsuit Against Bank of America Corp., Bank of America, N.A., Countrywide Financial Corp., Countywide Bank, FSB, and Merrill Lynch & Co. for Discriminatory Mortgage Lending, Servicing and Foreclosure Practices Civil Action No. 15-CV-04081

Metro Atlanta Minority Communities Devastated by Defaults, Home Vacancies and Foreclosures Caused By Defendants' "Equity Stripping" Practices

Nov 23, 2015, 17:29 ET from Harris Penn Lowry LLP

ATLANTA, Nov. 23, 2015 /PRNewswire/ -- Cobb County, DeKalb County, and Fulton County, Georgia, filed a lawsuit against Bank of America Corporation, Bank of America, N.A., Countrywide Financial Corporation, Countywide Bank, FSB, and Merrill Lynch & Co seeking damages and injunctive relief for violations of the federal Fair Housing Act ("FHA").  The lawsuit alleges that the defendants violated the FHA by engaging in a discriminatory housing practice known as "equity stripping."  The lawsuit was filed in the United States District Court for the Northern District of Georgia, Civil Action No. 15-CV-04081.

The Complaint alleges two key, interrelated, components to the scheme: a predatory and discriminatory mortgage loan-making component and a loan servicing/foreclosure component. According to the Complaint, beginning in the early to mid-2000s these institutions targeted African American and Latino borrowers for, or steered them into, higher cost, non-prime mortgage loans.  At the time, the banks knew that many of the loans were likely to fail or were not in the borrowers' best interests.  They either originated such loans directly or assisted other brokers and affiliates – including Accredited Home Lenders, AmeriQuest Mortgage Company, First Franklin Financial Corp., New Century Mortgage Corp., Option One Mortgage Corp., and Ownit Mortgage Solutions -- to originate them.

The loans were intended to generate higher profits and mortgage servicing income for the banks, including through higher loan interest rates, increased mortgage servicing charges over the life of the loan, loan pre-payment penalties, expensive added fees, and increased default interest rates and fees charged to late-paying or defaulting borrowers.

Defendants' equity stripping practices, which continue to this very day, occur throughout the life of each predatory and discriminatory mortgage loan following origination of the loan – that is, during servicing each time the borrower makes a high cost loan payment, upon default when fees are charged and interest rates increase, and ultimately upon foreclosure on a borrower's home.  

These practices, which result in increased numbers of home vacancies and foreclosures, harm the Counties themselves through increased costs for additional County services, forced reallocations of limited County resources, losses in County revenue, including property taxes, losses in the value of the tax base, and due to other economic and non-economic injuries arising from blight and property vacancies.  Many of these harms are concentrated in minority communities.

Bank of America's continued servicing of such mortgage loans, failure to modify them, and default servicing and foreclosure practices, perpetuate this scheme.  Even worse, over the last few years Bank of America has foreclosed on minority borrower homes in a discriminatory manner as reflected in the numbers and concentration of foreclosures in minority neighborhoods compared to non-minority neighborhoods.

Bank of America, Countrywide and Merrill Lynch are responsible for at least 59,000 potentially predatory, discriminatory, mortgage loans in these three Counties alone. 

Between 2006 and 2014 Defendants initiated over 11,600 foreclosure filings in predominately minority neighborhoods in the Counties. This represents a disproportionately large number of the total 19,800 foreclosures that they initiated in the Counties over the same period.

In late 2012 the Counties filed a similar Fair Housing Act lawsuit against HSBC North America Holdings, Inc.  The Counties' claims here also are similar to lawsuits filed by several other County and City governments, including Cook County, IL, against these same lenders.  The Counties are represented by Harris Penn Lowry LLP.

Harris Penn Lowry LLP –
Founded in 2006, Harris Penn Lowry LLP, handles large-scale litigation throughout the United States. With offices in Atlanta and Savannah, Ga., the firm's partners are sought-after, highly skilled trial lawyers, who have gained impressive reputations for past trial work, including many multi-million dollar verdicts and settlements.


SOURCE Harris Penn Lowry LLP