Fair Housing Act

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7^th Circuit Court of Appeals

Case Name: County of Cook v. Bank of America Corporation

Case No.: 22-1407

Officials: Easterbrook, Ripple, and Wood, Circuit Judges.

Focus: Fair Housing Act

In a lawsuit initiated in 2014 under the provisions of the Fair Housing Act (42 U.S.C. 3601–19), Cook County asserted that certain banks had excessively extended credit to specific borrowers, resulting in subsequent defaults and foreclosures that inflicted harm upon the County.

The County contended that these banks intentionally directed their efforts toward minority borrowers, granting them credit approvals without proper scrutiny or adherence to guidelines. This allowed these borrowers to secure loans beyond their financial capacity, involving discretionary imposition of additional points, fees, and other credit-related expenses beyond objective risk-based financing rates. The banks also allegedly offered higher-cost loan products and concealed the inflation of appraisal values to support inflated loan sums. When numerous borrowers found themselves unable to meet their obligations, Cook County claimed that it was left to address the aftermath of vacant properties, as well as the loss of tax revenue and transfer fees.

The Seventh Circuit opined that allowing lawsuits seeking damages for every conceivable consequence of an FHA violation would open the door to unwieldy and intricate litigation involving substantial damages. Under the FHA’s principle of proximate cause, a direct connection between the alleged harmful conduct and the asserted injury is necessary. In this case, Cook County sought compensation for effects that extended far beyond the initial harmful action. The primary victims of direct harm were the borrowers, who suffered both housing loss and financial setbacks. The banks were the secondary parties affected. Cook County, at best, occupied a tertiary position in the chain of harm, with its injury stemming from the adverse effects on both borrowers and banks.

Affirmed.

Decided 08/16/23

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