Friday, June 7, 2019

Cook County Foreclosure Lawsuit Against Banks Continues

Back in 2014, Cook County filed a lawsuit against Wells Fargo, HSBC, and Bank of America related to the banks’ foreclosure practices, according to an article in the Cook County Record. While the outcome of that case limited the damages available to Cook County and to affected borrowers, a recent federal case could allow Cook County to have federal judges reconsider the ruling. We want to say more about the 2014 case and its connection to foreclosures in Chicagoland, and the possible implications of the recent case for reconsidering what banks owe when they engage in predatory lending practices.

Getting the Facts of the Case: Cook County’s Recent History Suing for Discriminatory Lending Practices Leading to Foreclosure

The 2014 lawsuit alleged “the lenders engaged in discriminatory predatory lending practices against racial and ethnic minority borrowers,” and that those discriminatory lending practices “fueled a wave of foreclosures, stripping equity from minority borrowers and sending them into default.” As a result, homes throughout the Chicago area and its suburbs ending up vacant, and property values in neighborhoods across the region declined. As the article explains, that lawsuit resulted in a 2018 court ruling in which federal judges “limited the kinds of monetary damages the country could demand from the big banks.”

In short, the 2018 decision said that Cook County could only obtain “direct costs the Cook County Sheriff’s Office and courts may have been forced to pay to handle a larger than usual number of foreclosure cases.” Cook County had sought much more extensive damages that would have included payment for “depressed property tax collections” as well as for “increased blight and crime.” While the 2018 ruling came as a disappointment for consumer advocates and for Cook County, a recent federal court ruling suggests that Cook County may in fact have been able to seek some of those additional damages.

New Federal Case Expands Possibilities for Damages in Foreclosure and Predatory Lending Cases

While the recent case occurred in the 11th Circuit Court of Appeals, it could prove to be persuasive in Illinois. In that case, the 11th Circuit ruled that the City of Miami should be able to move forward with a predatory lending claim against several big banks, including both Wells Fargo and Bank of America, which were also named in the Cook County suit. The 11th Circuit specifically clarified that “the connection between the banks’ alleged actions and the lost property tax revenues and other economic woes the city suffered” could show that the big banks proximately caused those harms. Accordingly, the Court allowed the city to move forward with its lawsuit seeking more extensive damages against the named big banks.

According to Judge Stanley Marcus, who authored the decision, “proximate cause asks whether there is a direct, logical, and identifiable connection between the injury sustained and its alleged cause.” Judge Marcus emphasized that the city showed there was indeed proximate cause because it proved that the bank’s conduct was “necessarily and directly connected to” the harms that occurred in the city.

Cook County is now using the language from that decision to argue that it should be entitled to seek broader damages from the big banks named in its lawsuit.

Learn More from a Foreclosure Defense Lawyer in Oak Park

If you need help with foreclosure defense or what to learn more about your options if you were the victim of predatory lending practices, an Oak Park foreclosure defense attorney can assist you. Contact the Emerson Law Firm for more information.

See Related Blog Posts:

Is a Short Sale Better Than a Foreclosure?

Recent Court Case Addresses Role of Third-Party Buyers in Foreclosure Sales