African-American owner of South Side laundromat in foreclosure sues Inland Bank for discrimination

By The Cook County Record | Jun 10, 2015

Owner Lloyd Hughes alleges foreclosure action stems from 'classic example of equity stripping, discrimination'

The owner of a longtime South Side Chicago laundromat is suing Inland Bank, alleging the bank, in seeking to close his business and take his home in the process, has engaged in a discrimination against “an African-American owned business located in an African-American neighborhood.”

Lloyd Hughes, 67, opened Laundryworld at 6331 S. Martin Luther King Drive, at the edge of Chicago’s Woodlawn and Washington Park neighborhoods, in 1967. In order to make capital improvements in 2010, Hughes obtained a loan through the Small Business Administration, issued by First Choice Bank of Geneva, Ill., and secured by a mortgage through Chicago Title Land Trust Co. As collateral, Hughes used his home and a residential property he’d inherited from his father.

In the complaint filed June 8 in federal court in Chicago, Hughes maintains he never missed a payment to First Choice. But the bank failed and entered receivership in 2011.

In August 2011, Inland purchased Hughes’ loan and mortgage, which Hughes’ complaint says was done at a substantial discount.

“At the time, one of Inland’s tools for expanding was to shift responsibility for losses at the bank to other entities controlled by the Inland Group,” Hughes complaint says. “This behavior would eventually draw the ire of state and federal regulators.”

The complaint alleges Hughes’ dealings with Inland offer “a classic example of unlawful equity stripping and racial discrimination,” behaviors which Hughes alleged caused him to default on his loan and allowed Inland to foreclose on Laundryworld, as well as the two collateral homes.

Shortly after buying the loan, and without Hughes’ knowledge, Inland entered into a consent degree with the FDIC and Illinois Department of Financial and Professional Regulation, prohibiting Inland from modifying Hughes’ loan for eight months. However, during that time Inland allowed Hughes to make interest-only payments and Inland executives told him of plans to extend the loan’s repayment period. The bank then allowed partial monthly payments and allegedly gave assurances of a modification that would allow Hughes to remain in good standing.

Based on those “repeated assurances,” Hughes fell behind on payments. At one point, Hughes alleges the bank told him and his attorney he could ignore a default notice, and continued to accept partial payments despite the bank’s internal designation of the loan as defaulted.

In December 2013, Inland announced it would not consider loan modifications. In April 2014, the bank initiated foreclosure proceedings against Hughes, which are pending in Cook County Circuit Court.

“It is clear from that, from the very beginning, Inland had no intention of servicing an African-American owned business located in an African-American neighborhood,” the complaint states. “Indeed, the very first thing Inland did with (Hughes’) loan was reclassify it as a ‘troubled’ loan, without any legitimate reason.”

Hughes said Inland treated his loan differently from those of its mortgagors of different races who were similarly current on their loans, yet were not flagged for monitoring and eventual liquidation.

Hughes – who says he could still repay the loan, albeit on a slightly extended schedule – has requested a jury trial on five counts, including two for racial discrimination and one each of violating the Fair Housing Act and the Federal Equal Credit Opportunity Act, as well as tortious interference with business expectancy. He seeks damages, legal fees and other relief.

Representing Hughes are attorneys John Bucheit and Zach Rustad, of Roeser Bucheit & Graham, as well as Daniel Twetten, of Loevy & Loevy, both of Chicago.

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