Feds To Scrutinize Lenders For Evidence Of "Ghetto Loans" Peddling, Reverse Redlining In Home Loan Originations

Reuters reports:

• The U.S. Justice Department has set up a new unit to pursue home lending discrimination and already has more than three dozen cases pending, a senior department official said on Thursday. The unit will target "unscrupulous" mortgage brokers and so-called redlining cases in which lenders charge more or refuse to loan money in certain areas like poorer neighborhoods or to lower income individuals, said Thomas Perez, assistant attorney general for the department's civil rights division.

• Also under scrutiny will be lenders who targeted certain products to minority communities which have led to "unprecedented numbers of foreclosures and the resulting disinvestment and blight," he said in prepared remarks to the Rainbow PUSH Coalition's annual Wall Street conference.

• In Maryland only 18 percent of white homeowners had subprime loans while 54 percent of African Americans and 47 percent of Hispanics had subprime loans, he said. Perez said that there are already 38 fair lending investigations pending and that in addition to focusing on bad loan acts in the past, there are signs already that lenders are turning their attention to loan modifications.

• "All too many homeowners in distress are getting solicitations for help with offers that sound too good to be true, because they are," Perez said. Such cases would fall under the Fair Housing Act and Equal Credit Opportunity Act.

Source: US Justice Dept boosting loan discrimination focus.