The Georgia counties' failure or success with the relatively novel strategy could help determine whe

ATLANTA -- Three Atlanta-area counties have filed a lawsuit claiming that British bank HSBC cost them hundreds of millions of dollars in extra expenses and damage to their tax bases by aggressively travel trailer blue book signing minorities to housing loans that were likely to fail.
The Georgia counties' failure or success with the relatively novel strategy could help determine whether other local governments try to hold big banks accountable for losses in tax revenue based on what they claim are discriminatory or predatory lending practices. Similar lawsuits resulted in settlements this year worth millions of dollars travel trailer blue book for communities in Maryland and Tennessee.
Fulton, DeKalb and Cobb counties say in their lawsuit, which was filed in October, that the housing foreclosure crisis was the "foreseeable and inevitable result" of big banks, such as HSBC and its American subsidiaries, aggressively pushing irresponsible loans or loans that were destined to fail. The counties say that crisis has caused them tremendous damage.
Deatrice travel trailer blue book S. Besong says it feels like winning the lottery: Her mortgage servicer recently agreed to reduce her loan by $249,000 next year, saving her $300 a month and erasing the debt overhang that has her owing far more than her house is worth.
"It's not only the personal damage that was done to people in our communities," said DeKalb County Commissioner Jeff Rader. "That has a ripple effect on our tax digest and the demand for public services in these areas."
The lawsuit says the banks violated the Fair Housing Act, which provides protections against housing or renting policies or practices, including lending, that discriminate on the basis race, color, national origin, religion, sex, family status or handicap.
The counties travel trailer blue book say their tax digests - which represent travel trailer blue book the value of all property subject travel trailer blue book to tax - have declined from a high point in 2009. Fulton's tax digest has dropped about 12 percent, from $32.7 billion to $28.7 billion; DeKalb's has dropped about 20 percent, from $22 billion to $17.5 billion; and Cobb's has dropped about 15 percent, from $25.5 billion to $21.3 billion, the lawsuit says. That reduces their ability to provide critical travel trailer blue book services in their communities, the lawsuit says.
In addition to reducing tax income, vacant or abandoned homes that are in or near foreclosure create additional costs for the counties, the lawsuit says. Their housing code and legal departments have to investigate and respond to code violations, including travel trailer blue book having to board up, tear down or repair unsafe travel trailer blue book homes. They have to deal with public health travel trailer blue book concerns, such as pest infestations, ruptured water pipes, accumulated garbage and unkempt yards. And fire and police departments have to respond to health and safety threats.
The lawsuit says predatory lending practices include: targeting vulnerable borrowers travel trailer blue book for mortgage loans with unfavorable terms; directing credit-worthy borrowers to more costly loans; putting unreasonable travel trailer blue book terms, excessive fees or pre-payment penalties into mortgage loans; basing loan values on inflated or fraudulent appraisals; and refinancing a loan without benefit to the borrower.
The counties are asking the court to order the bank to stop its behavior and to take steps to prevent similar predatory lending in the future. They are also seeking financial compensation for the damages they've suffered and punitive damages to punish the bank for its "willful, travel trailer blue book wanton and reckless conduct." travel trailer blue book The counties say the financial injury they've travel trailer blue book suffered is in the hundreds of millions of dollars.
Lawyers travel trailer blue book for the counties declined interviews on the case, but one of them, Jeffrey Harris, said in an emailed statement that they are continuing to investigate other banks and could file additional complaints.
Similar suits were filed against Wells Fargo by the city of Memphis and surrounding Shelby County in Tennessee in 2009 and by the city of Baltimore in 2008. Those suits were settled earlier this year. Both settlements included $3 million to the local governments for economic travel trailer blue book development or housing programs and $4.5 million travel trailer blue book in down payment assistance to homeowners, as well as a lending goal of $425 million for residents over the subsequent five years, according to media accounts.
As in those cases, the lawsuit filed by the Georgia counties says the bank, in this case HSBC, targeted communities travel trailer blue book with high percentages of Fair Housing Act-protected minority residents, particularly blacks and Hispanics.
"Communities with high concentrations of such potential borrowers, and the potential borrowers themselves, were targeted because of the traditional lack of access to competitive credit choices in these communities and the resulting travel trailer blue book willingness of FHA protected minority borrowers to accept credit on uncompetitive rates," the lawsuit says.
Before the beginning of the subprime lending boom in 2003, annual foreclosure rates in metro Atlanta averaged below 1 percent, but U.S. Department of Housing and Urban Development data show that the estimated foreclosure rates for each of the three counties now average travel trailer blue book more than 9 percent and are as high as 18 percent in the communities with the highest percentages travel trailer blue book of minority borrowers, the lawsuit says.
"If you can show that you yourself have suffered travel trailer blue book harm by an illegal act under the Fair Housing Act, even if you are not the target, even if you are not the intended victim, you can still sue to stop the behavior and to recover any damages that you can prove you suffered because of the violation of the Fair Housing Act," said Steve Dane, a lawyer whose firm was involved in the Memphis and Baltimore lawsuits.
The costs incurred by counties because travel trailer blue book of high rates of foreclosure are reflected in court records and related fees for each home, and police and fire departments travel trailer blue book can calculate the costs of responding to a given address, travel trailer blue book Dane said. He said it takes a lot of time and effort to gather the necessary records to prove the harm.
But Jaime Dodge, an assistant law professor at the University of Georgia, says she thinks more cases are likely, at least in the short term as municipal governments continue to feel the squeeze of a tight economy and seek ways to refill travel trailer blue book their coffers. They may try to test federal courts in different parts of the country, travel trailer blue book she said. Successes in multiple jurisdictions could lead to more attempts, but if courts travel trailer blue book start knocking travel trailer blue book the suits down that would likely discourage them, she said.
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