Montgomery and Prince George’s counties have jointly filed two federal lawsuits against Bank of America, N.A. and Wells Fargo Bank, N.A., seeking damages and injunctive relief for violations of the federal Fair Housing Act those banks and their acquired entities committed, including Countrywide Financial Corporation, Merrill Lynch & Co and Wachovia Corporation. The lawsuits were filed on Nov. 20 in the United States District Court for the District of Maryland.
The complaints, filed by Brown Goldstein Levy LLP in conjunction with Milberg Tadler Philips Grossman LLP and Evangelista Worley, LLC, the three law firms representing the Counties, allege that beginning in the early to mid-2000s, these mortgage lending institutions targeted African American and Latino borrowers for, or steered them into, higher cost, non-prime mortgage loans. The complaints further allege that at the time, defendants 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.
At issue are tens of thousands of potentially predatory and discriminatory mortgage loans made to minority borrowers in the two Counties since 2000 for which the defendants are responsible. In total, Bank of America, Countrywide and Merrill Lynch are responsible for at least 97,500 potentially predatory and discriminatory mortgage loans originated in Montgomery County and Prince George’s County; and the Wells Fargo defendants are responsible for more than 56,000 loans.
“The discriminatory equity stripping housing practices engaged in by the banks and their affiliates greatly damaged our communities,” said Montgomery County Executive Ike Leggett. “Bank of America’s wrongful mortgage practices continue to this day. We cannot allow this to continue to harm the finances of the County and shift the costs that the defendants are responsible for onto our taxpayers.”
Many of these loans continue to exist.
The complaints allege these loans were intended to, and did, generate higher profits and mortgage servicing income for the defendant banks 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.
Wells Fargo and Bank of America’s continued servicing of such mortgage loans, failure to modify them, and default servicing and foreclosure practices, perpetuate this scheme.
Additionally, during the last few years the banks have 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.
The lending agencies’ discriminatory housing practices have resulted in increased numbers of home vacancies and foreclosures that have harmed both Counties through increased out-of-pocket costs for County services incurred for processing foreclosures, and the costs relating to the identification, maintenance, repair, monitoring and demolition of foreclosed, abandoned and/or vacant properties. In addition, the Counties have been damaged from the erosion of the tax base, the loss of property tax and other revenue and from the resources they have had to shift to address urban blight and the racially segregative effect on their respective communities and neighborhoods.