Plans are afoot endorsed by Birmingham City Council to sue mortgage companies for wrongful lending practices. Lawyer Dagney Johnson Walker will be representing the city in this regard.

Walker commented that the sub-prime mortgage activity that has led to this foreclosure crisis has affected all – lenders, borrowers as well as the government and the local communities. The lowering of property values has aggravated matters. Walker said that the city exists for the purpose of protecting its residents and that means the city has a wide range of responsibilities to attend to. The loss of each house becomes a load for Birmingham and a blight to the locality. The houses that are not in foreclosure suffer because of the general fall in property prices. Abandoned units create other problems for the city authorities.

The proposal for suing mortgage companies got the support of councilwoman Miriam Witherspoon who is a committee member. A meeting was held in the Central Alabama Fair Housing Center. The agency has been tracking cases of predatory lending in the mortgage industry. Witherspoon feels that this move will be beneficial not only for the citizens of Birmingham but to residents of all other cities in the country who have been similarly victimized by the foreclosure crisis.

Research is still being done regarding the lawsuit and the names of the particular companies to be charge sheeted. The court will expect damages to be exacted although the specific figure has not been arrived at yet. Walker expects payment from the judgment or settlement. She will get 50% if the city wins. But if the city fails then Walker does not get paid anything.

Baltimore and Cleveland as well as few other cities have launched similar legal actions. Birmingham would be the first southern city to follow suit. Apart from asking for monetary damages the mortgage firms would be expected to change their sub-prime lending policies. To this effect the court would be moved to issue injunction orders. The idea is not only to prevent future loss but also to realize damages already done. Birmingham will be raising its voice to join the cry of those who are pointing to the injustice done by this type of lending focusing on certain localities. Details are still being worked out. It seems the ball of action will not start rolling till the end of June.

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