CINCINNATI (Legal Newsline) – A lower court was wrong to dismiss Chase Bank’s challenge of litigation filed against it by the city of Cleveland over subprime mortgages, the U.S. Court of Appeals for the Sixth Circuit has ruled.
However, since the U.S. Supreme Court has refused an appeal in Cleveland’s first lawsuit against Chase and the bank was dropped as a defendant in the second lawsuit in July, the ruling is essentially moot, wrote Judge Karen Nelson Moore.
Cleveland sued 21 financial institutions in 2008, alleging they created a public nuisance by securitizing subprime mortgages. The financial collapse hit Cleveland especially hard, and the city recently used funds from a national settlement to knock down vacant and dilapidated homes, the Huffington Post reported.
The lawsuit was filed by the city through attorney Joshua Cohen of Cohen Rosenthal & Kramer. It was the subject of a 2010 documentary titled “Cleveland vs. Wall Street.”
“Cleveland’s decision to address the issue of subprime-mortgage securitization through litigation arguably reflects an otherwise frustrated regulatory intent, as the city likely could not regulate such activity directly,” Moore wrote.