Jump to Navigation

Dreher Tomkies LLP
Attorneys at Law
2750 Huntington Center
41 South High Street
Columbus, Ohio 43215
Telephone (614) 628-8000
Fax (614) 628-1600



Law Digests Online!
Home
Firm Overview
Practice Areas
Attorney Profiles
Alerts
Multistate Digests
Articles
Representative Clients
Resource Links
Firm Brochure
Contact Us
Save to My Favorites
Print this page
Alerts Contextual Image

OHIO CITY SUES 21 ENTITIES AS "NUISANCES" OVER SUBPRIME MORTGAGE CRISIS

The City of Cleveland has filed a complaint in state court against 21 banks, investors and investment banks, alleging public nuisance for their respective roles in generating sub-prime mortgages within the City's borders and the subsequent foreclosure crisis. City of Cleveland v. Deutsche Bank Trust Co., No. CV 08 646970 (Cuyahoga County Ct. Corn. Pl. filed Jan. 10, 2008).

The suit alleges that, over the course of several years, these financial entities routinely made money available to unqualified borrowers who had no realistic means of keeping up with their loan payments in the long term. The complaint claims that the City, being distinct from the United States as a whole, suffered more significantly than the rest of the country because of its struggling economy and the absence of increased property values during the sub-prime lending boom. The financial entities, according to the complaint, should have foreseen, and in all likelihood did foresee, a foreclosure crisis as the inescapable consequence of saturating the Cleveland area with sub-prime mortgage loans.

The City claims that it suffered damage as the direct and proximate result of the financial entities' conduct, including the cost of monitoring, maintaining and demolishing foreclosed properties, as well as decreased property tax revenues resulting from the depreciated value of foreclosed-upon properties and surrounding real estate. The City seeks compensatory damages for lost revenue and costs.

Cleveland is not the only city to sue a bank over the sub-prime mortgage crisis. The City of Baltimore recently sued Wells Fargo Bank, N.A. and Wells Fargo Financial Leasing, Inc. in federal court for allegedly violating the Fair Housing Act of 1968 by targeting predominantly African-American areas for predatory, high-risk loans. Mayor and City Council of Baltimore v. Wells Fargo Bank, N.A., No. L08 CV 062 (D. Md. filed Jan. 8, 2008).

Ohio Attorney General Marc Dann has said that the State of Ohio is considering a state lawsuit against companies in the sub-prime mortgage industry. According to Dann, a potential suit is months away and will not likely be based on public nuisance claims. As previously reported, Dann is considering potential violations of anti-trust laws, civil rights laws and the Ohio Consumer Sales Practices Act. See DLT Alerts of Nov. 14, 2007 (Ohio Attorney General to Investigate Subprime Mortgage Lenders); June 8, 2007 (Ohio Attorney General Files Suit Against Ten Companies for Predatory Lending Practices); May 18, 2007 (Ohio Attorney General Focuses on Subprime Mortgage Lenders).

  • Mike Tomkies