Common Pleas Court judge rejects most of Cleveland's suit against banks over subprime loans (Plain Dealer)

Media Reports News Other Relevant News

Common Pleas Court judge rejects most of Cleveland’s suit against banks over subprime loans (Plain Dealer)

CLEVELAND, Ohio — A Cuyahoga County judge has dismissed most of a 2008 public nuisance lawsuit Cleveland officials filed against 21 banks and mortgage companies in an attempt to punish them for bankrolling subprime loans.

The dismissal cuts off another avenue the city sought to collect millions of dollars in damages related to the foreclosure crisis. A similar suit was dismissed in July 2010 by the U.S. Circuit Court of Appeals in Cincinnati.

The lawsuit languished on Cuyahoga County Common Pleas Judge Brian J. Corrigan’s docket for more than a year with no action taken until a Plain Dealer editor inquired about it on Nov. 15.

On Nov. 22, Corrigan dismissed the city’s charges that bank mortgage lending practices created a public nuisance, and that the banks violated the Ohio RICO Act which city lawyers say “by knowingly instituting foreclosure proceedings with documents falsely claiming titles to the underlying mortgages, constituting a pattern of corrupt activity.”

In May 2009, U.S. District Judge Sara Lioi ruled that Cleveland could not make a nuisance claim because it had no authority to regulate mortgage lending or prove direct relationship between the city’s damages and the bank’s activities.

Corrigan wrote that too many other factors like urban decline, proper foreclosure actions and increased crime rate also contributed to the city’s lost tax revenues and increased expenditures.

That also was similar to Lioi’s ruling, when she said the city could not prove banks were directly responsible for blight, crime and other problems foreclosures had caused in Cleveland.

But Corrigan left a portion of the city’s lawsuit intact. Cleveland sought a claim that banks owe the city costs associated with the demolition of certain properties. This part of the suit will be heard in the future.

Joshua R. Cohen, the attorney who represented the city in the initial suit, which was filed in January 2008, was not happy with Corrigan’s ruling.

“There’s a lot I’d like to say, but we respectively disagree with the court’s decision,” Cohen said. “We are disappointed with the way it turned out, and I hope the city decides to appeal.”

Andrea Taylor, a spokeswoman for Cleveland Mayor Frank Jackson, said since the lawsuit has not been entirely dismissed, the city still has a pending claim and cannot file an appeal until the entire suit is dismissed.

Read it from the source.