Lawsuit: Banks Steered Blacks To Bad Loans

(CBS/ AP)  The NAACP is accusing Wells Fargo and HSBC of forcing blacks into subprime mortgages while whites with identical qualifications got lower rates.

Class-action lawsuits were to be filed against the banks Friday in federal court in Los Angeles, Austin Tighe, co-lead counsel for the National Association for the Advancement of Colored People, told The Associated Press.

Black homebuyers have been 3½ times more likely to receive a subprime loan than white borrowers, and six times more likely to get a subprime rate when refinancing, Tighe said. Blacks still were disproportionately steered into subprime loans when their credit scores, income and down payment were equal to those of white homebuyers, he said.

Melissa Murray, vice president of corporate communications for Wells Fargo & Co., called the lawsuit "totally unfounded and reckless." The bank is receiving federal bailout funds.

"We have never tolerated, and will never tolerate, discrimination in any way, shape or form in any of our business practices, products, or services," Murray said.

HSBC said it does not comment on litigation. "HSBC stands by its fair lending and consumer protection practices, and we are confident that we are treating our customers fairly and with integrity," said Neil Brazil, vice president for public affairs.

An NAACP member, Amara Weaver of Milwaukee, said she was one of the victims of predatory lending. She bought her first home in 1984, receiving a 6.25 percent fixed-rate mortgage. She says she had a steady job as a human resources director for a social services agency, never missed a mortgage payment and maintained excellent credit.

In 2004, she wanted to buy the house next door for her son to live in. She said the bank promised her a low fixed rate for a $40,000 loan, but at the closing, when reading the fine print, she noticed that the rate was actually 11 percent.

"I was blown away," said Weaver, an NAACP member. "I didn't have any choice (but to sign). ... It made me feel violated."

Similar NAACP lawsuits are pending against a dozen other subprime lenders.

"This is systematic, institutionalized racism," Tighe said. "Once you take out factors relative to income and credit risk, the only difference between the borrowers is the color of their skin."

Tighe estimated that "tens of thousands" of blacks had been forced into bad loans, but said it was difficult to gauge the scope of the problem because banks keep much of their internal data private. The lawsuits could force banks to divulge closely guarded information, such as how banks can determine the race of a loan applicant and how federal bailout funds are being spent.

The NAACP is seeking reforms from the banks such as increased transparency in the loan process, educational outreach and internal training.

A Federal Reserve study last year found that 55 percent of blacks and 17 percent of whites were steered to sub prime mortgages, even when they qualified for lower interest rates, CBS News correspondent Randall Pinkston reported.

"It's a surprise to some people," Carver Federal Savings president Deborah Wright told Pinkston. "It's not a surprise to us."

[Solarrays247]

Negrows are victims again, go figure. You could almost see this one coming. I guess they are going to get their 40 acres and that mule after all.
Posted by ken1dall at 2:40 PM : Mar 13, 2009

With bigots like this so common on this blog, it's not hard to imagine the banks being prejudiced too.

It is sad, really.
Posted by cs4466 at 12:34 AM : Mar 14, 2009

Yes, and it is only being human, really. For too many, there are still those who can only feel good about themselves only if they can feel superior to another. It is sad, really.

[wdh3007]

The headline of this article sounds like racial profiling it wasn't just black people it was everyone that was poor at that time who got approved when the banks knew they couldn't pay back the loans.

[payasyougo]

"I was blown away," said Weaver, an NAACP member. "I didn't have any choice (but to sign)
----
"Didn't have any choice...."

So basically she read the contract, understood that she was being taken advantage of, and signed anyway.

[renonv5]

This is systematic, institutionalized racism," Tighe said. "Once you take out factors relative to income and credit risk, the only difference between the borrowers is the color of their skin."

This is systematic, institutionalized bu!!****. You have got to put down that race card once and for all. The only people keeping it alive and at the forefront are blacks themselves. Hundreds of thousands of people have lost their homes due to predatory lending, how can you possibly say that it was worse for blacks??? Is there a place on the loan application that asks what color your skin is???

[tbbaot]

Banks were forced to steer unqualified persons of all races to bad loans. Read up on Barney Frank and Chris Dodd and you will see how they refused to regulate the Sub-prime market and actually backed changes to force banks to loan money to people that did not have the ability to pay it back.
Naturally some blacks are thinking they were singled out some how. Nothing new there.

[apprxam]

Why this suit would be a threat to whites makes no sense. If banks steered a particular group to financial ruin, then what do you care if a remedy is sought and gained. This isn't affirmative action, but redress to financial harm. Fixed or not, why would it matter, even if you hate blacks. The consequences of the cases outcome, either way, would mean absolutely nothing to most Americans. And is fiscally insignificant to those not involved, except that accountability can could ascribed to two huge institutions that influences much ado about this country.

It's merely an argument of fair treatment, not preferences over others.

[HosedAgain]

Man, Eric Holder sure riled up the natives when he gave his "speech of cowards" last month. Did anyone put a gun to any black borrowers head and force them to sign? Hell no! Most of these blacks put themselves in their own situation trying to get a sweet deal, and not thinking about the possible reprocussions of their action. Half of these borrwoers never planned to pay back the loan anyway. I wonder if any of these "black complaintants" borrowed money from the black owned bank in California that democrat Maxine Waters (D) so covertly steered millions of dollars to last year. But she "swears" there's no corruption there. The bank which her husband conveniently owns a half a million dollars worth of stock in. The "advancement " of colored people is on the shoulders of each individual, not the rest of the world. The only thing the NAACP has done in the past, and continues to do, is incite racism the same way LaRaza does with their advocacy for illegal immigration. Read the "fine print" dumba$$es and take responsibility for your own shortcomings. And quit blaming your problems on everyone else around you who you don't agree with. The sooner you give up the old "downtrodden race" BS and the "the white establishment is holding the black man down" BS, this nation of cowards can move forward. The barriers have been broken and the glass ceiling was crushed when this worthless POTUS got elected, so give up the excuses.

[cs4466]

Negrows are victims again, go figure. You could almost see this one coming. I guess they are going to get their 40 acres and that mule after all.
Posted by ken1dall at 2:40 PM : Mar 13, 2009

With bigots like this so common on this blog, it's not hard to imagine the banks being prejudiced too.

It is sad, really.

[aziridine]

If these folks didn't like the terms of the mortgages, why did they enter into them? This is what competition is about. It's funny that none of these people appear to have gone to multiple lenders. Basic common sense dictates that you should fully understand anything you sign and that if you are unhappy with a contract, don't sign it.

It would appear that the NAACP is simply trying to capitalize on the political complexion of the times to support a frivilous lawsuit.

By the way, just who are the "Colored People" that the NAACP is trying to advance. I am unaware of any ethnic group called "Colored People"..... Sounds like the NAACP is Politically Incorrect, here.

[aziridine]

If these folks didn't like the terms of the mortgages, why did they enter into them? This is what competition is about. It's funny that none of these people appear to have gone to multiple lenders. Basic common sense dictates that you should fully understand anything you sign and that if you are unhappy with a contract, don't sign it.

It would appear that the NAACP is simply trying to capitalize on the political complexion of the times to support a frivilous lawsuit.

By the way, just who are the "Colored People" that the NAACP is trying to advance. I am unaware of any ethnic group called "Colored People"..... Sounds like the NAACP is Politically Incorrect, here.