Cities can sue banks for predatory mortgage lending

On KPCC’s Take Two:

The housing market collapsed in back in 2008, and many families here in Southern California saw their own homes collapse with it.

They were drowning because of risky mortgages peddled to them by some banks.

But just yesterday, the U.S. Supreme Court ruled that cities like L.A. can go ahead and sue banks for the damage they did.

“They have to show that there was some sort of fraud,” says Richard Green, director of the USC Lusk Center for Real Estate. “And they need to show that neighborhoods were hurt because of the prevalence these practices.”

There’s a high bar to prove that connection, but if a city succeeds then the settlement could help with the public coffers, debt relief for people who took out the loans or more.

Listen here.