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» VISIT US ONLINE @ DSNEWS.COM 93 IN THE NEWS JPMorgan Chase Sued for Discriminatory Lending Practices Foreclosures continue to be a national problem, and one metro's city attorney thinks a large part of the problem came from discrimination. Los Angeles city attorney Mike Feuer is suing one of the nation's largest banks, JPMorgan Chase, alleging the bank engaged in discriminatory lending. e city contends the mega-bank caused a wave of foreclosures that diminished the city's property tax revenues and increased the need for costly city services. Allegedly, the bank engaged in a pattern of imposing dif- ferent terms or conditions to consumers on a discriminatory basis, or "redlining." "JPMorgan engaged in reverse redlin- ing, and continues to engage in said conduct, by extending mortgage credit on predatory terms to minority borrowers in minority neighborhoods in Los Angeles on the basis of the race or ethnicity of its residents," the complaint said. Recently, new litigation against JPMor- gan Chase was bolstered by a court ruling that denied a motion by Wells Fargo to dismiss a similar complaint made by the city. Feuer sued Wells Fargo, Bank of America, and Citigroup in December. "L.A. continues to suffer from the foreclo- sure crisis—from blight in our neighborhoods to diminished revenue for basic city services," Feuer said. "We're fighting to hold those we allege are responsible to account and to help bring back every community in our city." e City of Los Angeles is seeking dam- ages for reduced property tax revenues result- ing from the decrease in value of foreclosed properties that are often left neglected and vacant, resulting in surrounding properties to lose value. e root cause of the foreclosures, according to the city, is from discriminatory lending practices by JPMorgan Chase. e suit also seeks damages for the increased cost of city services resulting from foreclosures. "When banks engage in such discrimina- tory conduct, the misconduct has profound financial consequences for the cities in which mortgaged properties exist, and banks should be responsible for those financial consequenc- es," the city's complaint read. California Man Sentenced to 51 Months for Fraud e Office of the Special Inspector General for the Troubled Asset Relief Pro- gram (SIGTARP) announced that Steven Pitchersky of Rancho Mirage, California, was sentenced to 51 months in federal prison for a scheme to defraud GMAC Inc., since its rebranding as Ally. rough his fraudulent actions, the company incurred losses of approximately $5.3 million. In addition to the prison term, Pitchersky is ordered to pay restitution in the amount of roughly $3.2 million, serve five years of supervised release, and pay a $100 special assessment. "Greed got the best of Pitchersky, and for his crimes, he will spend the next 51 months in federal prison," said Christy Romero, spe- cial inspector general. "rough his mortgage origination company, Pitchersky ran a $5.3 million mortgage fraud scheme that caused millions of dollars in losses to Ally Financial, which still owes billions in TARP funds." Pitchersky operated Nationwide Mort- gage Concepts (NMC), a California mort- gage lender. Between 2009 and 2011, Ally was the warehouse lender for thousands of mortgages loans. NMC borrowed from a $10 million warehouse line of credit to refinance first mortgages held by other institutions. Pitchersky misrepresented himself to Ally in order to secure the warehouse line of credit, including a false representation that NMC already had another $10 million ware- house line of credit with another company. e company, "MPL," was a fake, with a contact number listed for a "Rick Jay" that dialed to Pitchersky's cellphone. He funneled the funds through a third- party title company, "Hanover," which was actually created by Pitchersky, allowing him to have complete control over money NMC acquired from Ally's warehouse line. "Between December 2010 and January 2011, Ally advanced NMC approximately $5.3 million to pay off 23 first mortgages for NMC clients. NMC failed to use these funds to pay off these mortgages and instead used the money to pay off first mortgages for other customers," SIGTARP said. In total, $17.2 billion in federal taxpayer bailout funds were invested in Ally Financial through TARP. Pitchersky pled guilty to wire fraud in connection with the scheme. Tech Industry Drives San Francisco Economy, Housing Market A booming tech sector and overall job and income growth have helped fuel a real estate boom in San Francisco, according to a recent special commentary from the Wells Fargo Eco- nomics Group. e group found that the city's perennially tight housing market has gotten even tighter, pushing rents and home prices up. One emerging trend is the increased numbers of younger tech workers living and working around downtown San Francisco. e group comments that major tech com- panies—Twitter, Dropbox, Square, Trulia, and Salesforce.com—are setting up shop in downtown San Francisco. A wave of new office construction for the recently relocated tech giants has set off a wave of accompany- ing apartment development. e group notes that jobs in the tech sec- tor increased 6.9 percent in the last year alone. By comparison, the financial and legal sectors in San Francisco have declined 0.7 percent in the same time. e area's unemployment rate has also fallen, down to 6.4 percent, its lowest level in almost six years. Due to the increase in employment in and around the Bay Area, the supply of homes and apartments available for sale or rent re- mains exceptionally tight. San Francisco has a 2.8-month supply of homes on the market, down from four months a year ago. Although rising rents and tight invento- ries have led to a surge in new construction, the new supply is barely able to keep pace with demand. "Multifamily permits, which include both apartments and condominiums, surged 30.4 percent in Santa Clara County during 2013 and have eclipsed previous highs for this market," the group said. Single-family homebuilding is rebound- ing but only "slowly and off exceptionally low levels." Concerns over the rapid expansion of the tech industry are rising to the surface, as lower-income residents are feeling the effects from higher costs of living. e group cau- tiously noted, "ere is little doubt that San Francisco's near-term economic fortunes ride with prospects for the tech sector, which has directly accounted for 25.3 percent of the jobs created in San Francisco over the past year and more than 32.1 percent of job growth in Silicon Valley."

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