NAACP Sues Mortgage Banks for Pushing Blacks into Subprime Mess

On Friday in Los Angeles, the National Association for the Advancement of Colored People filed suit in federal court against two major banks alleging that they intentionally assigned black customers subprime mortgages while giving whites better rates. The civil rights group is accusing Wells Fargo and HSBC of forcing blacks into subprime mortgages while whites with identical qualifications got lower rates.

The Associated Press spoke with Austin Tighe, co-lead counsel for the NAACP:

Tighe says black home buyers have been three and a half times more likely to receive a subprime loan than white borrowers, and six times more likely to get a subprime rate when refinancing. He says blacks still were disproportionately steered into subprime loans when their credit scores, income and down payment were equal to those of white home buyers. Source

The NAACP has previously filed suit against 12 subprime lenders, charging that racial discrimination was a factor in determining which clients were offered the lowest rates. A report from the Center for Responsible Lending (CRL) found that blacks were more likely -- 31 to 34 percent -- to be issued more expensive subprime loans than were whites with equal creditworthiness and credit risk.

Though the Center for Responsible Lending (CRL) has not finished a full analysis of the information, which the fed collects under the Home Mortgage Disclosure Act (HMDA), an initial review shows that abusive lending patterns continued even though the number of higher-cost mortgages made to all borrowers fell last year. Only about half of the disparity can be explained by differences among borrowers in income, gender and loan size; by whether a borrower has a co-signer; or by the location of the home.
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"This isn't just a matter of paying more. These numbers highlight how communities of color are being hit hardest by the foreclosure crisis," said CRL President Michael Calhoun. "Research by CRL and others shows that a high share of these families could have qualified for less expensive loans -- loans that would have provided a basis for successful home ownership. Now that dream is being dashed for millions of people who already lagged behind financially." Source

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