Wednesday, September 24, 2008

Minneapolis Neighborhood Gets Favorable Settlement With Mortgage Company In "Careless Lending" Lawsuit

In Minneapolis, Minnesota, the Minneapolis Star Tribune reports:
  • A north Minneapolis neighborhood that filed a groundbreaking careless-lending lawsuit against mortgage giant CitiMortgage has forced the lender to eat more than $200,000. The Hawthorne neighborhood has bought for just $18,900 a fire-damaged house on which CitiMortgage held a $235,000 mortgage.


  • The [Hawthorne Area Community Council] attorney, Mark Ireland, said the legal challenge was the first he's aware of in the Twin Cities where a neighborhood has proactively forced a lender to pay attention to neighborhood impact of its lending rather than passively suffering increasing blight.


  • The case had the potential to set a precedent in Minnesota. Nationally, lenders can be sued for "improvident lending" in cases involving credit card debt or loans to someone who is mentally incompetent. The Hawthorne neighborhood sued to extend that to mortgage lending. The settlement means there's no such precedent.

For more, see Hawthorne scores in the fight against blight (A Minneapolis neighborhood's unusual settlement with a lender over a blighted property now gives it the chance to rehab a slew of homes).

For the earlier story announcing the start of the lawsuit, see Neighbors sue lender over house left vacant (A north Minneapolis neighborhood aims to hold a lender accountable for alleged careless lending with action that could break new legal ground). ForeclosuresDestroyNeighborhoodsApple