After Supreme Court Win, Miami Has Tough Task in Proving Housing Bias Case by Banks

, Daily Business Review


The U.S. Supreme Court allows Miami to pursue damages against Bank of America and Wells Fargo for alleged redlining before the housing crash, but proving it won't be easy.

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  • cathycardosa

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  • Joseph Frustaci

    Yes. A deluge of lawsuits should follow the Supreme Court‘s ruling - they are necessary to make history via imprisoning those who knew what they knew when they knew it. Miami, and other similarly impacted cities, must stop at nothing to prove proximate cause. There is no doubt regarding foreseeability. Clinton‘s 1995 National Home Ownership Strategy unleashed Washington‘s efforts with the private sector - Wall Street - to loosen lending standards which was the beginning of the end. The ultimate loosening was the NINA - No Income No Asset loan. A virtually blank 1003 (loan application), those loans, as well as many other sub prime loans, depended heavily on the subject property‘s appraisal. Unfortunately, appraisers back then were pressured into pushing valuation to the brink, so much so even borrowers questioned the sustainability of the numbers, underscored by the fact they were borrowing 100% loan to value (sometimes more than 100% when closing costs were thrown in). Prior to 1995, lenders worked with potential homeowners to ensure they saved down payment money and worked with them to resolve credit issues. If a borrower had to wait a little while to qualify, they took the loan officer‘s advice and waited. But, 1995 changed all that, giving rise to the 2006 crash and, of course, predatory lending. Predatory lenders took full advantage of those not quite ready to buy a home. They stopped at nothing preying on borrower‘s somewhat fabricated desire to own a home. If one digs deep enough, predatory lending took place everywhere harm in making a loan was not prevented. Foreseeable? No question. However, the lure of making fast money, as fast as the appraiser could bring in the value, was too much to resist. Why take time to work with a borrower‘s issues? Why wait to make money: shoot the fish in the barrel now. Foreseeable? Deutsche Bank bet against itself and won - big time. Hollywood made the movie - THE BIG SHORT. Miami and other cities suffered the direct consequences of banks needing to keep Wall Street flooded with product for their mortgage backed securities. Between 2000 and 2006, the number of "Housing Bubble" media mentions grew from 1400 to 5500, but no one listened. In December 2007, Barron‘s front page gave Standard & Poor‘s and Moody‘s a "FFF" failing grade. They must have seen that grade coming? In 2007, Citigroup‘s Chuck Prince said something to the effect of, "We have to keep dancing till the music‘s over." Well, the party ended, everybody drove home drunk, and no one got arrested. Take the lead, Miami... it‘s now or never.

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