Lawyers' Committee for Civil Rights Under Law Files Amicus Brief Showing How Discriminatory Mortgage Lending Harms Cities

This week, the Lawyers' Committee for Civil Rights Under Law, the National Fair Housing Alliance, the Poverty and Race Research Action Council, and a group of housing scholars filed an amicus curiae, "friend of the court," brief in City of Oakland v. Wells Fargo & Co. a case pending in the U.S. District Court for the Northern District of California involving the harm inflicted on cities by the targeting of predatory high-cost loans at communities of color. Attorneys from the Lawyers' Committee for Civil Rights Under Law, the law firms of Brancart & Brancart and Cohen Milstein Sellers & Toll PLLC, and the National Fair Housing Alliance served as co-counsel on the brief.

The brief was filed in support of the plaintiff's opposition to Wells Fargo's motion to dismiss the City of Oakland's complaint in which the City alleges that the bank's lending practices discriminated against persons of color and resulted in concentrated foreclosures in predominantly African American and Latino neighborhoods. In turn, these foreclosures caused a loss of property tax revenue for the City and increased code enforcement and other costs for the City. The types of practices that the City is challenging significantly contributed to the 2008 financial crisis and ensuing recession, which exacerbated the racial wealth gap.

The motion to dismiss focuses on an issue arising from the recent Supreme Court decision in Bank of America Corp. v. City of Miami, which held that cities had standing to initiate such suits under the Fair Housing Act, but that they must allege that a defendant's discriminatory conduct is the proximate cause of the harm they have experienced. The Supreme Court's decision remanded to the lower courts to address the standards for demonstrating proximate cause and whether the City's complaint met that standard. The City of Oakland case is very similar to the City of Miami case. In their brief, the civil rights groups and housing scholars argue that that the broad remedial purposes of the Fair Housing Act necessitate a flexible and broad standard of proximate cause and that the harm that Oakland alleges from the discriminatory predatory mortgage lending meets this standard.

"The deliberate targeting of African-American and Latino communities with predatory subprime mortgages has devastated cities across the country," said Kristen Clarke, president and executive director of the Lawyers' Committee for Civil Rights Under Law. "Congress passed the Fair Housing Act in 1968 precisely in order to counteract the wide ranging effects of practices that are the direct historical antecedents to this kind of discrimination."

"The Supreme Court's recent decision in Bank of America, et al. v. City of Miami ratified the broad scope of the Fair Housing Act for those seeking to redress harm for discriminatory conduct," said Shanna L. Smith, president and CEO of the National Fair Housing Alliance. "Thus, the National Fair Housing Alliance strongly supports the City of Oakland's lawsuit holding Wells Fargo accountable for the deep injury to communities of color, suffered from the toxic loans during the foreclosure crisis."

"The banking industry's discriminatory reverse redlining practices have caused direct harm to cities like Oakland in the form of lost tax revenue and increased spending on municipal services in the minority areas the banks have targeted," said Brian Corman, an associate at Cohen Milstein. "Oakland's injury is separate and distinct from the harm done to individual victims of discrimination, and the Fair Housing Act is the means by which Oakland's harms may be redressed."

"Institutions like Wells Fargo don't make their profits in a vacuum: they have an enormous effect on the communities they are supposed to serve," said Megan Haberle, director, Housing Policy for the Poverty and Race Research Action Council. "The claims in this case reflect that plain reality. As our brief makes clear, we need our civil rights laws to remain as powerful as they were designed to be."

To read the full amicus brief, click here.