Recently, Miami became the second U.S. city to sue JPMorgan Chase & Co. (JPM - Free Report) over its discriminatory lending practices. Last month, the bank was sued by Los Angeles over similar charges.
In the case filed in the U.S. District Court, Southern District of Florida, the city of Miami is seeking unspecified damages from JPMorgan owing to its engagement in unfair mortgage practices and violation of the U.S. Fair Housing Act. The lawsuit indicts the company for issuing roughly 2,400 discriminatory loans between 2004 and 2012 that ended in foreclosure.
JPMorgan has been accused of refusing mortgages to the minority communities on terms similar to others. Further, it allegedly provided loans to the minority communities which were beyond their means to pay back.
Consequently, the chance of foreclosure is 4.6 times higher in the minority neighborhoods of Miami compared with the same in neighborhoods of white residents. Moreover, increased number of foreclosures lowered Miami’s revenue from property taxes and simultaneously increased the expenditure for city services on these properties.
Notably, JPMorgan is not the only bank to be sued by Miami and Los Angeles. Both cities have also sued Wells Fargo & Company (WFC - Free Report) , Citigroup Inc. (C - Free Report) and Bank of America Corp. (BAC - Free Report) on similar charges.
For JPMorgan, the lawsuit is yet another addition to its seemingly endless legal hassles. The bank continues to face several cases and probes regarding its business conduct preceding the financial crisis. Though the company has resolved many litigation issues in the past one year, increasing legal disputes will likely keep dragging its financials lower.
Currently, JPMorgan carries a Zacks Rank #4 (Sell).