Predatory lending practices by mortgage giant Bank of America could be partially to blame for the foreclosure crisis that caused property tax bills to spike in Cook County.
How the Foreclosure Prevented Property Tax Collections
In the wake of the 2008 recession, there were over 100,000 foreclosed homes in Cook County. In a ripple effect, the foreclosures caused nearby homes to drop in value, delivering a substantial hit to Cook County’s property tax base.
The county continued funding paychecks, health care, and other services despite the loss of tax revenue that resulted from the foreclosures. As a result, Cook County needed to increase the tax rates and property owners through the county were left to foot the bill.
In 2014, the county filed the initial lawsuit against Bank of America, claiming that the mortgage lender’s predatory lending practices, particularly in Hispanic and African-American communities, resulted in a surge of foreclosures. The county now also argues that the foreclosures significantly reduced property tax revenue through the depreciation of home values in those neighborhoods.
The Effect on Other Residents
The lawsuit also claims that because of the lender’s predatory practices and resulting depreciated home values, other property owners wound up shouldering the burden of higher taxes. The lawsuit further asserts that “raising the tax rate disadvantages the county in competition for new businesses and business expansion compared to neighboring counties with lower tax rates.”
In turn, higher tax rates hinder the ability for businesses and communities as whole to prosper. However, the Cook County claim doesn’t mention specific dollar amounts for additional tax or other details, instead requesting that U.S. District Court Justice Elaine Bucklo allow the county to tally the damage based on the records for tens of thousands of properties currently in its possession.
The county hopes to recover compensation for the damages that the foreclosures and declining values caused, comparing the situation to that of a married man who’s sustained a work-related injury and wishes to file a workers’ comp claim while his wife is required to work extra hours to compensate for his lost income. Even if the wife is able to take on additional work, the county argues, this doesn’t void the husband’s claims.