Report Finds 59% Of NYS Foreclosures Linked To Subprime Loans, Minority Communities Targeted

In New York State, CNNMoney.com reports:

• Mortgage scammers took advantage of loopholes in New York State lending laws to defraud homeowners and lending institutions all over the state, according to a new report released Thursday. The New York State Commission of Investigations reported that the state's mortgage borrowers need more regulatory protection from predatory lenders. It also linked subprime loans closely to New York's growing foreclosure problem; in 2007, 59% of all foreclosures statewide involved subprime loans.

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• In one example [of a case in which there was never any possibility that the borrower could afford to pay off a loan] from 2006, Suzette Francis, a woman with two young children, no assets, working as a $10-an-hour security guard and living in a homeless shelter, obtained a mortgage for $470,000 that, as the report stated, "exhibited ... every characteristic and feature associated with dangerous subprime loans." [...] She would have to work 400 hours a month just to pay her loan.

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• Particularly targeted all over the nation have been minority communities. The Commission found that, all other things equal, New York state African-American and Hispanic borrowers were twice as likely to have subprime loans as whites. A lot of 'one-stop-shops,' where real estate agents are also mortgage brokers, operate in minority neighborhoods," said Mary Biunno, senior assistant counsel for the Commission, "and they rope in a lot of people."

For more, see Foreclosures linked to subprime fraud (New York state investigation of subprime mortgage practices reveals fraud proliferated in the state, which had the eighth-highest number of foreclosures in 2007).

For the report, see A Perfect Storm: Easy Money and the Mortgage Meltdown - The Subprime Mortgage Crisis in New York State. PredatoryLendingRaceBias

PBS' Nightly Business Report On Minorities & Subprime Loans

A story appearing on PBS' Nightly Business Report on Tuesday made this observation:

• Nationwide, African-Americans and Hispanics hold twice as many sub-prime loans as whites. Sub-prime loans are also concentrated in minority neighborhoods. George Washington University sociologist Gregory Squires has researched sub-prime loans issued around the country. He says borrowers' credit worthiness doesn't explain the disparity.

For more, see program transcript, Did Minorities Get Submarined By The Sub-Prime Mortgages?

Go here and go here for other posts on alleged race bias in real estate transactions.

Editor's Note:

The U.S. Department of Housing & Urban Development ("HUD") rolled out a public service announcement last week featuring actor Dennis Haysbert that is part of a national campaign to raise public awareness about lending discrimination.

• Go here to watch HUD's new fair lending PSA,
• Go here for HUD's Fair Housing Ad Campaign,
• Go here for HUD press release. PredatoryLendingRaceBias

NCRC: Minorities At Highest Risk Of Getting Stiffed With High Cost Home Loan

In Washington, D.C., a news release issued by the National Community Reinvestment Coalition announces:

• A new report by the National Community Reinvestment Coalition (NCRC) shows that minority consumers, regardless of income level, are most at risk of receiving high-cost home mortgage loans. High-cost loans represent the riskiest and most poorly underwritten home mortgages, millions of which have fallen into foreclosure in the last two years. The study, Income Is No Shield Against Racial Differences in Lending II, examined subprime and near prime (“Alt-A”) loans from more than 219 metropolitan areas, as reported under the Home Mortgage Disclosure Act data from 2006, the most recent publicly available data.

For more, see:

• News release: New NCRC Study Shows Racial Disparities In High-Cost Lending Remain Entrenched (Foreclosure Prone Loans Made Disproportionately to Minorities),
• Full Report: Income Is No Shield Against Racial Differences in Lending (A Comparison of High-Cost Lending in America’s Metropolitan and Rural Areas).

Go here and go here for other posts on alleged race bias in real estate transactions. PredatoryLendingRaceBias

Texas Homeowner Files Suit Alleging Race Bias, Truth In Lending Violations In Predatory Refinance

In Baytown, Texas, The Houston Chronicle reports:

• Nanette Lewis refinanced her mortgage to get peace of mind. Instead, she says, she got a bait-and-switch, predatory loan and heartbreak. Now far less naive, the Baytown woman decided to fight back. In a lawsuit she filed against her lenders in federal court last week, she alleges she was targeted for a loan with onerous terms because she's black. Her suit mirrors one filed by the attorney general of Massachusetts and another by the city of Baltimore.

• All three accuse lenders of "reverse redlining" — targeting minority loan applicants for the worst possible mortgage deals. Lewis' lawsuit may be the first of its kind in Texas. She is represented by a legal aid lawyer and seeking primarily, she said, to get the word out about what happened and to remove the lien from her property, though she still would be responsible for repaying the mortgage.

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• When she was laid off, Lewis worried she'd miss a mortgage payment and lose the house. She went to Lone Star Legal Aid to see how she could keep the home safe. Lawyer Sapna Aiyer said she was surprised at Lewis' "horrible, horrible" mortgage terms. Aiyer said the lawsuit cites the federal Home Ownership and Equity Protection Act and the Texas Constitution, which bar lenders from excessive points and fees (more than 8 percent) and from certain changes in loan terms at closing.(1)

For more, see Lawsuit over signing shock (Baytown woman sues lenders, says she was a victim of predatory lending practices because she's black).

For the homeowner's lawsuit described in this story, see Lewis v. Alpha Mortgage, et al.

The non-profit legal services firms representing the homeowner are Texas RioGrande Legal Aid (Austin, Texas; provides free legal services to low-income and disadvantaged clients in a 68-county service area that covers the southwestern third of the state, including the entire Texas-Mexico border region) & Lone Star Legal Aid (Houston, Texas; serves 72 counties in the East Region of Texas and 4 counties in Southwest Arkansas).

For the race bias-related lawsuits referenced in the story filed by Massachusetts & Baltimore City, see:

• Commonwealth of Massachusetts v. H&R Block, Inc., et al.,
• Mayor and City Council of Baltimore v. Wells Fargo Bank, N.A., et al. (8.76 MB).

For a July, 2008 study on Mortgage Lending & Race, see the National Community Reinvestment Coalition Study: Income Is No Shield Against Racial Differences in Lending.

Go here and go here for other posts on alleged race bias in real estate transactions.

(1) The lawsuit alleges violations of Home Ownership and Equity Protection Act (15 U.S.C. §§ 1602(aa) and 1639); the Truth in Lending Act (15 U.S.C. § 1601 et seq. and § 1640(a)); the Equal Credit Opportunity Act (15 U.S.C. § 1691- 1691 (f)); the Fair Housing Act (42 U.S.C. § 3605); and the Texas Constitution, Article 16, §50(e)(2). PredatoryLendingRaceBias

NY AG Hits Lender For $1M To Resolve Charges Of Alleged Discriminatory Lending Practices

The New York Attorney General's Office announced last week:

• Attorney General Andrew M. Cuomo [...] announced that his office has issued more than $900,000 in restitution to approximately 270 African-American and Latino borrowers who experienced discriminatory lending practices by GreenPoint Mortgage. Further, the office is proceeding with its investigation into potential discriminatory pricing by various mortgage brokers that did substantial business with GreenPoint. Greenpoint is a subsidiary of Capital One Financial Corporation. The restitution comes from a groundbreaking fair lending agreement reached between the Attorney General’s office and GreenPoint totaling approximately $1 million.

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• The Attorney General’s office initiated an inquiry into GreenPoint after reviewing Home Mortgage Disclosure Act (HMDA) data showing that GreenPoint’s African-American and Latino customers were more likely than white customers to receive high-priced loans in New York.

For more, see NY AG Press Release: AG Cuomo Obtains Approximately $1 Million For Victims Of Greenpoint's Discriminatory Lending Practices.

Go here and go here for other posts on alleged race bias in real estate transactions. PredatoryLendingRaceBias