City of Cleveland Suing 21 Banks Over Increase in Mortgage Foreclosures

Chrissie Cole

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The city of Cleveland has filed a public-nuisance lawsuit against 21 of the biggest subprime mortgage lenders, such as Ameriquest Mortgage Co., seeking damages due to a huge increase in foreclosures.

Filed Thursday, in Cuyahoga County Common Pleas Court, the lawsuit alleges the banks created a foreclosure crisis, following subprime mortgages that have left the city to sustain hundreds of millions of dollars in damages.

Banks included in the lawsuit are:

Ameriquest Mortgage Co.
Bank of America
Citigroup
Credit Suisse
Deutsche Bank Trust Co.
J.P. Morgan Chase
Merrill Lynch
Bear Stearns
Wells Fargo
Washington Mutual,
Countrywide Financial
Fremont General Corp.
Morgan Stanley
GMAC-RFC
Goldman Sachs
Greenwich Capital markets
Novastar Financial
Option One Mortgage Corp
HSBC Holdings
IndyMac Bancorp

The lawsuit points to a steep increase in foreclosures in Cleveland, to more than 7,500 in 2007 from less than 120 in 2002. Cleveland had the 10th-highest foreclosure rate among U.S. metropolitan areas in October, according to RealtyTrac.

Cleveland's action follows Baltimore's filing of a lawsuit earlier this week against Wells Fargo. That lawsuit, in U.S. District Court, alleged Wells Fargo was liable for millions of dollars in damages under the Federal Fair Housing Act for targeting minorities with bad loans and discriminatory and unfair terms that resulted in foreclosures.