11th Circuit Dismisses City’s FHA Suit Against National Bank

The U.S. Court of Appeals for the 11th Circuit recently affirmed the dismissal of a city’s FHA suit against a national bank alleging that the bank made loans that were more expensive for minority borrowers as compared to non-minority borrowers.  The circuit panel’s decision was the result of the city’s appeal of a lower court decision granting the national bank’s motion for summary judgment based on the city’s failure to present sufficient evidence of discriminatory lending, but the 11th Circuit vacated the district court’s award of summary judgment, and held that the district court should have dismissed the action on standing grounds.  

The city alleged that “’African-Americans and Hispanics and residents of predominantly African-American and Hispanic neighborhoods . . . receive[d] mortgage loans from [the bank] that have materially less favorable terms than mortgage loans given by [the bank]  to similarly situated whites and residents of predominantly white neighborhoods in [the city].’”  The city’s complaint also addressed standing by alleging that “loans issued to minority borrowers in the city were more likely to go into default or foreclosure as a result of the bank’s alleged practice of steering those borrowers into higher-cost loans.”    The city also argued that the bank’s actions led to reduced property values in the city, and decreased the city’s property tax revenue.  However, the district court found that the city failed to present sufficient evidence to support a claim of discriminatory lending because it identified only two loans issued to minorities that were purportedly more expensive than loans issued to similarly situated white borrowers, and failed to present any evidence of a causal connection between the bank’s lending policies and the cost disparity.  The court granted the motion for summary judgment, and the city subsequently appealed.

On appeal, the bank argued that the district court should have dismissed the claims for lack of standing because none of the loans originated by the bank foreclosed, so the city could not have suffered an injury as a result of any of the loans.  The court agreed that the city lacked standing, because the city’s evidence that certain loans may go into foreclosure at some point in the future failed to satisfy the requirement that “a threatened injury be ‘imminent, not conjectural or hypothetical.’”  Although the complaint referenced ten loans that had gone into foreclosure, the court ruled that “the City did not produce any evidence of the effect of these foreclosures on property-tax revenues or municipal spending.  Nor did the City present any evidence that these loans were issued on discriminatory terms.”  Therefore, the 11th Circuit vacated the district court’s award of summary judgment in favor of the bank, and remanded with instructions to dismiss the case for lack of standing.