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September 23, 2009
City's Public Nuisance Suit Against Subprime Lenders Dismissed
The city of Cleveland's public nuisance suit against companies involved in the subprime mortgage industry was dismissed in federal court. The city had brought suit against twenty-one companies representing every segment of the subprime mortgage market. Cleveland alleged harms stemming from a high foreclosure rate, such as increased police and fire costs and decreased tax revenue. Judge Sara Lioi said the suit violated an Ohio state statute barring municipalities from taking action to regulate loans. She cited a U.S. Supreme Court holding that "regulation can be as effectively exerted through an action for damages as through some form of preventative relief." Her opinion also said the city's suit must also fail because it did not establish an unreasonable interference with a public right or a causal link between the mortgages and the region's economic plight.
Posted by dag77 at September 23, 2009 02:34 AM
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