Ga. counties sue HSBC over bad home loans [View all]
Source: Associated Press
Three counties in Georgia have filed a lawsuit claiming that British bank HSBC cost them hundreds of millions of dollars in expenses and damage to their tax bases by aggressively signing minorities to housing loans that were likely to fail.
The Georgia counties' failure or success with the relatively novel strategy could help determine whether other local governments try to hold big banks accountable for losses in tax revenue based on what they claim are discriminatory or predatory lending practices.
Fulton, DeKalb and Cobb counties say in their lawsuit, filed in October, that the housing foreclosure crisis was the "foreseeable and inevitable result" of big banks, such as HSBC and its U.S. subsidiaries, aggressively pushing loans that were destined to fail. The counties say the crisis has caused them tremendous damage.
The lawsuit says predatory lending practices include: targeting vulnerable borrowers for mortgage loans with unfavorable terms; directing credit-worthy borrowers to more costly loans; putting unreasonable terms, excessive fees or pre-payment penalties into mortgage loans; basing loan values on inflated or fraudulent appraisals; and refinancing a loan without benefit to the borrower.