CHICAGO (CN) - HSBC's predatory residential mortgage lending targeted minority homeowners, and triggered urban blight in black and Hispanic neighborhoods when the housing bubble burst, Cook County claims in court.
Cook County sued HSBC North America Holdings, HSBC Finance Corporation, HSBC Mortgage Corporation, and seven other HSBC affiliates, including HSBC Bank and Decision One Company, in Federal Court.
"Plaintiff seeks injunctive relief to remedy, and monetary damages for, defendants' predatory and discriminatory residential mortgage lending and servicing activities that have resulted in - and will continue to cause - unprecedented numbers of mortgage loan delinquencies, defaults, foreclosures and/or home vacancies in plaintiff's communities and neighborhoods, particularly those communities with high percentages of FHA [Fair Housing Act] protected minority residents," the complaint begins.
From 2006 until the housing bubble burst in 2008 HSBC was the largest subprime mortgage lender in the U.S., the county claims.
Its predatory lending, especially in the subprime residential mortgage market, directly led to the housing market's collapse in 2008, causing "tremendous tangible and intangible damage to plaintiff including the erosion of plaintiff's tax base; the loss of property tax revenue; out-of-pocket costs relating to abandoned or vacant properties; the loss of certain intangible property recording fee income; and many other injuries to the fabric of plaintiff's communities and residents arising from the resulting urban blight," according to the 108-page lawsuit.
"Plaintiff, which is the embodiment of all the communities, neighborhoods and residents it collectively represents, seeks to hold defendants financially accountable under the FHA for that portion of plaintiff's injuries that defendants' own actions already have caused to plaintiff's communities and neighborhoods (as distinct from the individual borrowers who also have been harmed). As contemplated by the FHA, plaintiff also seeks to hold defendants financially accountable for that portion of plaintiff's injuries that defendants' own actions are about to cause through additional mortgage delinquencies, defaults, home vacancies and/or foreclosures," the county says. (Parentheses in complaint.)
Minority homeowners disproportionately received costlier subprime loans through HSBC's predatory practices, and "and have been disproportionately and disparately impacted by the increased delinquencies, defaults, foreclosures and home vacancies resulting from such loans," according to the complaint.
The county claims that "defendants' policies, practices and actions individually, and/or in combination with each other, are a primary cause of the disparately high number of mortgage loan delinquencies, defaults, foreclosures and/or home vacancies in plaintiff's communities and neighborhoods with higher percentages of minority borrower homeowners, which have bled into plaintiff's surrounding communities and neighborhoods and exacerbated the spiraling level of mortgage loan defaults, foreclosures and home vacancies as home prices fall from increased foreclosures and the deteriorating economy."
The county seeks an injunction against HSBC's discriminatory conduct and punitive damages for discrimination under the Federal Fair Housing Act.
It is represented by John K. Kennedy with James D. Montgomery & Associates.