These big banks ain’t isht! HSBC has been hit hard with a lawsuit by three Georgia counties that say their residents were unfairly targeted for loans that the financial institute knew they would not be able to afford.
Via HuffPo reports:
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 signing minorities to housing loans that were likely to fail.
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.
“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 say their tax digests – which represent the value of all property subject 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 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 having to board up, tear down or repair unsafe homes. They have to deal with public health 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 for mortgage loans with unfavorable terms; directing credit-worthy borrowers to more costly loans; putting unreasonable 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, wanton and reckless conduct.” The counties say the financial injury they’ve suffered is in the hundreds of millions of dollars.
Andrew Sandler, a lawyer for HSBC and its subsidiaries, said he couldn’t comment on the case. A federal judge has given the bank until Jan. 25 to respond to the counties’ complaint.
This should be interesting to see if HSBC is held accountable considering the federal government JUST let them off the hook recently on the corporate corruption side. WE hope for the sake of Georgia’s economy that they’re forced to pay up in this case though!