Friday, February 6, 2009

NAACP wins first court battle against mortgage lenders

A federal judge last week allowed the NAACP to proceed with a race discrimination lawsuit against 15 home mortgage lenders nationwide. The judge denied the lenders’ motion seeking to dismiss the NAACP landmark lawsuit. The court also denied the lenders’ request for immunity from future lawsuits for their lending practices.

The mortgage lenders must now hand over documents that will reveal their mortgage policies and practices.

NAACP Interim General Counsel Angela Ciccolo said, “The NAACP brought this suit as part of its longstanding demand that offending lenders stop discriminatory practices and bring their activities into compliance with federal law. We look forward to now presenting our case to a jury.”

The lawsuit cites evidence that African American homeowners who received mortgage loans had a more than 30 percent greater likelihood of being issued a higher rate sub-prime loan than white borrowers with the same qualifications.

Detroit Branch NAACP Exec. Director, Heaster Wheeler, describes the court’s ruling as a “major victory for African Americans and communities of color.”

He told the Michigan Citizen that the decision holds further significance in light of the recent bailout packages prepared by Congress for the purpose of addressing "toxic loans."

“When America wanted to think that predatory lending was only a problem in certain communities, they ignored it,” Wheeler stated. “Mortgage companies will now be forced to look at their practices and restore some semblance of fairness.”

Wheeler says that predatory lending is an expression of new forms of racism that have developed from disproportionate separation from economic opportunities.

Attorney Jerry Goldberg of Moratorium NOW!, told the Michigan Citizen that the case would have a huge impact on the lending industry. The lawsuit leads to the question of damages to millions of homeowners who have been victims of destructive policies.

“There would certainly seem to be a damage component,” Goldberg told the Michigan Citizen. “All subprime loans need to be rewritten and reassessed.”

According to Goldberg, Detroit leads the nation in subprime, or high interest, loans with more than 85 percent of all mortgage agreements falling into that category.

The suit was filed in the U.S. District Court for Central District of California.

Lenders named in the suit include: Accredited Home Lenders, Inc., Ameriquest Mortgage Co., Bear Sterns Residential Mortgage Corp., Chase Bank USA, Citimortgage, First Franklin Financial Corp., First Tennessee Bank, Fremont Investment & Loan, GMAC Mortgage Group, LLC, GMAC ResCap, J.P. Morgan Chase & Co., Long Beach Mortgage, Option One Mortgage Corp., SunTrust Mortgage and WMC Mortgage, LLC.

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