The Supreme Court has ruled that cities have standing in lawsuits filed against mortgage lenders alleging discrimination.
At issue are a pair of
lawsuits filed in 2013 by the city of Miami against Bank of America Corp. and Wells Fargo & Co.
Miami alleges that the two banks violated the Fair Housing Act by targeting blacks and Latinos with predatory home loans.
In addition, the city claims that BofA and Wells Fargo induced defaults by failing to extend refinancings and loan modifications to minority borrowers on fair terms — leading to
excessive foreclosures and vacant homes in minority neighborhoods.
The complaints were dismissed by the district court in 2014.
Miami appealed, and in September 2015 the dismissals were reversed.
Then, in June 2016,
the Supreme Court agreed to hear the case.
On Monday, the Supreme Court decided the case in favor of Miami.
“The FHA defines an ‘aggrieved person’ as ‘any person who’ either ‘claims to have been injured by a discriminatory housing practice’ or believes that such an injury ‘is about to occur,’ (8 U.S.C. §3602(i)),” the decision states. “This court has said that the definition of ‘person aggrieved’ in the original version of the FHA ‘showed ‘a congressional intention to define standing as broadly as is permitted by Article III of the Constitution,’ (Trafficante v. Metropolitan Life Ins. Co., 409 U. S. 205, 209); and has held that the act permits suit by parties similarly situated to the city.”
The court concluded that Miami’s financial injuries fall within the zone of interests that the FHA protects.
The district court’s decision was vacated, and the case was remanded for the lower courts to “define, in the first instance, the contours of proximate cause under the FHA and decide how that standard applies to the city’s claims for lost property-tax revenue and increased municipal expenses.”
Newly appointed Supreme Court Justice Neil Gorsuch took no part
in the consideration or decision of the cases.
