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By Alexis Garrett Stodghill, BlackVoices.com
The Daily News is reporting that two mortgage brokerage firms, HCI Mortgage and Consumer One Mortgage, have been found guilty of intentionally over-charging black and Latino home loan applicants. To give an example:
The investigation found that Hispanic and black borrowers who used HCI Mortgage paid around 50%, or about $2,500, more than white clients.A user on the Daily News Web site made a very poignant comment regarding the situation. BronxGalG observes:
"This news is not new. Minorities are always being taken advantage of because they don't know how to question things or inform themselves before taking on huge responsibilities. They need to become educated consumers, first and foremost. Until they do that, they will continue to be overcharged and discriminated against on everything. It's a shame this keeps happening and will continue to do so. Let's try to become well informed consumers so this practice stops once and for all."
Well said. These two companies have been brought to justice, having been ordered to pay $665,000 in restitution to 445 minority borrowers. But think about how many companies must have gotten away with the same thing for years, without ever being caught. Think of the firms that prey on minorities today in the areas of car loans, "bad credit" credit cards and "pay day" loans. You can be sure that this recent finding gives us just a hint of the extent of minority lending abuses. This payback is pocket change when compared to the ocean of lost wealth created by the perfectly legal loan scams that are perpetually siphoning funds from blacks.
As predatory lenders clearly see blacks and Latinos as fair game for unconscionable practices, we really do need to look out for ourselves. How can we battle these criminally-minded companies? Please leave your thoughts below.
Comments: (236)
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By: LARRY D. BIGGINS on 1/07/2009 3:24PM
This whole argument is ridiculous. Any person that can afford $1000 rent can pay a $1000 mortgage. There is no set of specific rules for potential homeowners that set out what is a fair rate. Why should the people with the least ability to pay back higher interest rates get socked with excessive rates. All lenders get the bulk of their profits/interest in the early years of mortagages. I understand risk and return, but the problem is that greed has upped the ante in this equation. So much so that these idiots have screwed themselves out of business. We know life is not fair, but let us at least be reasonable. You can make a profit and help our country prosper. Home ownership makes for better neighbors and neighborhoods. If a rent payment and a mortgage payment is equal, why can't anyone afford a house? Inquiring minds would like to know.
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By: truthnothinbut on 1/07/2009 3:24PM
It isn't the fact that minorities are charged different rates that suprises me it's that this comes as a shock to anyone. Automobile dealers have been doing this for years. They have different intrest rates depending on your credit rateing and what they precive is the ability of the buyer to pay back the loan. The fact is that defaults and foreclosures are higher in the minoity community so the lenders try to get most of the money back before that happens. The system is screwed up because by doing this it makes it even harder for the minority consumer to make the payments.
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By: mickycheer21 on 1/07/2009 3:25PM
Historically speaking, minorities are treated differently (ummm...unfairly) in such situations. This has little to do with the inability to read or do research, as so many of you kindly point out, but has to do with the "What can be done about institutionalized racism?" mentality imposed on many minorities. In other words, you know you are being taken...but you figure there is nothing that can be done even in a time of a black president. Obama's mantra, "Yes, we can," should be everyone's mantra...well, maybe excluding the racists who mask their racism by saying, "I voted for Obama," OR "My best friend is black." As a young black woman (working on my PhD), I understand why people reading the article get offended: 1. They are white and remain firm that racism does not have any effects on today's society and 2. They are black or latino/a and wanting to be heard, understood and respected. Still, my voice will be trumped by the next person's complete disregard for my educated opinion (if an opinion can really be educated :) and defensive guards will be risen in the guise of "WHAT!? I'm white and even I pay high rates." Much love and respect to all...Mickycheer21
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By: joyce on 1/07/2009 3:27PM
RE truthnuthinbut
They have different intrest rates depending on your credit rateing and what they precive is the ability of the buyer to pay back the loan
This is called business. White people are charged an interest rate based on the same criteria. It has nothing to do with skin color, it has to do with your credit and your perceived ability/liklihood of paying
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By: phoward465 on 1/07/2009 3:27PM
That is a joke. I have been making mortgage loans for 25 years. It doesn't matter what color you are, it is about your credit history. Certainly these individuals had just as good a credit rating as the people that got a lower rate... give me a break. I guarantee you if you look at these individuals credit it was not stellar. Does matter what color you are! People need to get over the race issue, it is about your credit rating and other factors such as LTV, debt ratio, etc.
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By: rajedon on 1/07/2009 3:31PM
OK, that last comment was a little snarky. Right on point, but snarky. I hate a lot of the crap that has gone down in America since the baginning of the Clinton years and although I (reluctantly) voted for McCain because I detest the Democrats' embrace of big socialist government running everyone's life, I will give and hope all will give Mr. Obama all the support they can in his efforts to right the ship. It's a big tough nasty job. The God I pray to doesn't care about the color of Obama's or anyone else's skin, so I don't either. And we'd better get on board and get together or we'll all sink together.
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By: LARRY D. BIGGINS on 1/07/2009 3:35PM
Race is part of the issue. The main issue is lack of fundamental financial knowledge. If we can't learn this knowledge on our own, we must choose "experts" with our best interest in mind. That requires integrity and honesty, two qualities that are sorely lacking in our society today. Who can the consumers trust? Common sense is not so common! We all claim to have it but so few of us use it. Who sets up the credit structure? Who decides what type of client gets higher interest rates? If you make a small income and you choose to use credit, you better have control of your budget. We have learned to survive but not excel.
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By: elizloucen on 1/07/2009 3:38PM
There is still a distinct socioeconomic difference between whites and minorities in this country. Mortgage rates are based upon credit and downpayment. There are more disadvantaged blacks than whites - it's a fact. These things impact mortgage rates. Mortgages are sold as securities in the secondary market. A solid credit history and job pattern makes a stronger loan, which means a lower rate. A weaker credit history and income stream means a higher rate (which equats to points, which equates to fees). It's the way it goes. Rather than blaming the banking industry, why not blame the entire social structure. The banks are just doing what their investors require. If they didn't price their loans according to risk, there wouldn't be any loans available.
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By: Sax on 1/07/2009 3:41PM
They may be targeting minorities, but this is an issue for all. The fact that minorities were singled out is what is a terrible mess! Yes the article and quote are both racist. How do you expect anyone to be an expert at purchasing a house without being a certified Real Estate Agent??? Purchasing a first home can be tricky. Yes there are 1st time home buyer programs and those should be used. But that still does not make you an expert. Our government should not allow trick loans in the first place; this would not be an issue, and the housing market wouldn't be a wreck like it is. Foreclosures are not just happening to Latinos and African Americans, despite them being targeted by the mortgage companies!
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By: rajedon on 1/07/2009 3:43PM
Mickycheer21:
You make a good point. "Educated" opinion? I think the best that we really can say of ourselves is that we have, at least, a "considered" opinion-based on education and experience. You clearly have an open mind, a good heart and an optimism that will serve you well all your life. Arm yourself with that PhD and make a difference! Good luck!
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