City of Cleveland sues sub-prime mortgage lenders for negligence

The City of Cleveland is suing 21 mortgage lenders for damages that they claim to have incurred as a result of the U.S. sub-prime mortgage fallout. Cleveland Mayor Frank Jackson compares the resulting chaos to “organized crime activity on neighborhoods, cities and individual lives, sucking equity out” and says that city has been devastated by the negligence of lenders who signed off on deals they know they shouldn’t have made.

Cleveland, one of America’s poorest urban areas has seen over 7,000 foreclosures through both 2006 and 2007. In some areas of the city entire blocks of houses are abandoned, boarded up, and stripped of anything valuable. Most often, they ultimately meet a wrecking ball at the tax payer’s expense.

The City is claiming hundreds of millions in damages which result from lost tax revenue, the cost of demolished abandoned homes and the added cost of policing neighbourhoods which have become dangerous due to high rates of abandonment.

Mayor Jackson says, “We have to hold accountable those who are responsible.”

CNN report here.

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