WASHINGTON—CUNA, NAFCU and several financial services trade organizations have petitioned the U.S. Supreme Court to review a case involving Federal Housing Administration claims filed by municipalities.
CUNA, NAFCU and the other groups are asking the Supreme Court to review Bank of America v. City of Miami and Wells Fargo v. City of Miami, with the organizations saying they have a “significant interest in ensuring the Fair Housing Act (FHA) is enforced in a fair and reasonable way.”
The city of Miami brought suit against the two banks arguing that discriminatory actions against city residents entitles the city to damages for indirect harm. The city argued that foreclosures and other events stemming from unfavorable mortgages resulted in lost revenue from lower property taxes and other incurred expenses.
“The court of appeals held that the proximate cause requirement for private litigation under the FHA imposes little if any effective limitation on novel FHA claims by plaintiffs who are not the direct victims of an alleged FHA violation and instead seek compensation for ‘ripples of harm’ extending outwards from such violations,” the brief reads. “The massive wave of litigation under the FHA—brought by private lawyers on behalf of municipalities—will impose potentially enormous costs on lenders without significantly advancing the goals of the FHA.”
Three Reasons for Review Cited
The organizations believe the cases warrant Supreme Court review for at least three reasons:
- Numerous municipalities are asserting novel claims against banks under the FHA, seeking sums that range in the hundreds of millions of dollars, creating an issue of exceptional importance
- The Court of Appeals’ decision on remand fails to adhere to principles set out in a previous Supreme Court decision
- The Court of Appeals failed to recognize that both the federal government and directly injured borrowers are fully equipped to remedy violations of the FHA by seeking damages as well as injunctive relief