The city of Los Angeles has filed a federal lawsuit against the US bank JPMorgan Chase, accusing the lender of engaging in biased mortgage lending practices that started a foreclosure wave, knocking down the property values among minority borrowers.

Filed in the US District Court for the Central District of California, the lawsuit accused the bank of practicing mortgage discrimination in Los Angeles, since at least 2004.

Citing the complaint, the Wall Street Journal reported that the bank used discriminatory practices "by imposing different terms or conditions on a discriminatory and legally prohibited basis."

As per statements obtained confidentially from JPMorgan employees, Los Angeles said the bank’s loans from 2004 to 2011 in predominantly black or Latino neighborhoods were 2.19 times more likely to go into foreclosure than loans in mainly white areas. It said loans to minority borrowers went into foreclosure faster.

In a statement, Los Angeles Attorney Mike Feuer said "LA continues to suffer from the foreclosure crisis – from blight in our neighborhoods to diminished revenue for basic city services."

"We’re fighting to hold those we allege are responsible to account," Feuer added.

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData
Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

Los Angeles, which has earlier sued Bank of America, Citigroup and Wells Fargo & Co, seeks to hold JPMorgan liable for loss in property tax revenue caused by decreasing home values, and the cost to maintain vacant foreclosed properties.

Commenting on the lawsuit, JPMorgan spokesman Jason Lobo said in a statement, "We are disappointed the L.A. City Attorney is pursuing an adversarial approach to address city finances impacted by the recent economic downturn."

"The downturn was beyond our control," Lobo explained adding that the bank will defend itself against the lawsuit.