Two reports on mortgage lending practices, issued by Fair Finance Watch and the Center for Public Integrity reveal that from 2005 to 2007, the 19 federally bailed-out banks targeted Black homebuyer with toxic subprime loans....Well we're not going to take it anymore!
According to Fair Housing Act and Equal Credit Opportunity Acts, it is illegal to "Impose different terms or conditions on a loan" (such as different interest rates, points, or fees) based on race, color, national origin, religion, sex, familial status, or handicap.
The NAACP and others have filed separate class action lawsuits in U.S. District Court against many of the country's largest lenders. These lawsuits allege systematic, institutionalized racism in sub-prime home mortgage lending. Wells Fargo, (the #1 recipient of federal bailout funds) and GMAC Mortgage Group, just to name two, are among the many banks and mortgage lending firms named in the suits. Others are sure to follow as government reports seem to show this was a standard industry practice.
Wells Fargo charged Blacks more than twice as much as whites for home loans. JP Morgan charged Blacks and Latinos more than twice that of whites. Citigroup, US Bancorp and Wachovia charged minorities one and a half times more. Blacks and Latinos were more than one and half times more likely than whites, to be denied a loan by the top banks that received a taxpayer bailout.
According to the lawsuits, Black homeowners who received sub-prime mortgage loans from these lenders were more than 30 percent more likely to be issued a higher rate loan than Caucasian borrowers with the same qualifications. Income had little to do with whom the lenders pitched their subprime loans to. Race and neighborhood were the prime determinants. In fact, upper income Blacks are more than twice as likely to have a subprime loan as persons who lived in low-income white neighborhoods.
A 2002 study by the U.S. Department of Housing and Urban Development (HUD) cited in the lawsuits demonstrate that these lending disparities are pervasive (click here). The National Community Reinvestment Coalition's most recent study finds that discrimination against minorities still persists in mortgage lending (see Income is no Shield Against Racial Differences in Lending 07/2007). The Federal Reserve Board, the FDIC have all made similar observations.
"It is time for these lenders to be held accountable," said NAACP President Benjamin Todd Jealous, "We look forward to forcing real change and real relief through this lawsuit." "These banks are getting billions in bailout money yet think that they can get away with business as usual," said Austin Tighe, co-lead counsel for the NAACP. "Predatory lending policies and practices are legally actionable, morally reprehensible, and fiscally irresponsible."
The lawsuits accuses Wells Fargo and others of marking up interest rates or adding fees for Black borrowers seeking mortgages after agreeing to lend, based on criteria such as credit histories and home values. Homeowners claim such acts violated the federal Fair Housing Act and Equal Credit Opportunity Act. These cases seeks to make Wells Fargo and others, halt any racially biased lending practices, improve employee training, reimburse unfair charges, and pay punitive damages.
If you suspect that you have suffered damages due to racial discrimination with your home loan, please contact your local branch of the NAACP, or go here to send your Wells Fargo complaint to a lawyer who will evaluate your claim at no cost or obligation.