Still Standing, Barely: Bank of America Corp. v. City of Miami and the Impact on Fair Lending Litigation

Trevor C. Hoffberger

In the mid-1990s, changes in the mortgage lending market created new and harmful disparities for minorities in the United States. While access to mortgages increased in the 1990s, both the secondary mortgage market and the use of automated credit scoring set the stage for discriminatory and unfavorable loan terms. The development of the subprime mortgage market—involving higher costs and riskier terms for borrowers—enabled financial institutions to issue mortgages “without regard to the borrower’s ability to afford them.” These practices disproportionately affected minority communities; black and Hispanic borrowers were more than twice as likely to obtain a subprime loan than were non-Hispanic white borrowers. Consequently, these borrowers were significantly more likely to face mortgage foreclosure. In late 2009, subprime loans were past due at three times the rate of the national average of all mortgages, and lenders commenced foreclosure at over double the rate. Foreclosure rates in neighborhoods of major American cities skyrocketed, creating costs not only for the cities’ residents, but for the cities themselves.