Alleges Racial Discrimination
The NAACP filed a Federal class action lawsuit against fourteen of the country's largest subprime mortgage lenders, alleging systematic and institutionalized racism in home mortgage lending. The lawsuit, filed in U.S. District Court in Los Angeles, was announced July 12 at the NAACP's 98th annual convention.
According to the suit, a 2006 study by the Center for Responsible Lending found that African-Americans were 31 to 34 percent more likely to receive more expensive subprime loans with higher rates than Caucasians with equal creditworthiness and credit risk.
Sub-prime loans carry higher interest rates than other loan types and attract high-risk borrowers with questionable credit history. "Lenders named in the suit, on average, made high cost sub-prime loans to higher qualified African Americans 54 percent of the time, compared to 23 percent of the time for Caucasians," said NAACP Interim President & CEO Dennis Courtland Hayes.
Other studies cited in the lawsuit demonstrate that African-American homeowners are paying higher mortgage interest rates than their Caucasian counterparts. The Federal Reserve Board, U.S. Department of Housing and Urban Development, and the FDIC have all confirmed similar findings.
According to Angela Ciccolo, NAACP Interim General Counsel, these statistical disparities are not coincidental, but the result of systematic, targeted discrimination against African American borrowers. The NAACP's lawsuit is designed to stop lenders from engaging in institutionalized racism and to bring their practices into compliance with federal law, including the Fair Housing Act, the Equal Credit Opportunity Act, and the Civil Rights Act.
"The goal of the lawsuit is to identify and challenge those lending practices that are predatory, and to secure some compensation for those charged illegally by these lenders," said Walter Jarman, President of the NAACP San Bernardino Chapter.
Mortgage lenders named in the suit include: Ameriquest, Wells Fargo, Fremont, Option One, WMC Mortgage, Countrywide, Long Beach Mortgage, CitiGroup, BNC Mortgage, Accredited Home Lenders, Encore, First Franklin, HSBC, and Washington Mutual.
The NAACP is asking its members and all African American borrowers who bought or refinanced a home in the last five years, whether with a listed lender or another lender, to contact the NAACP, as they may be victims of discriminatory practices.
Woodie Rucker Hughes, President of the NAACP Riverside chapter, invites Inland Empire residents to contact their local chapter. "We are hoping to level the playing field and correct the problem so that homeownership doesn't turn into a nightmare and ruin the American dream for all potential homeowners." said Rucker Hughes.
The NAACP is represented by Feazell & Tighe LLP of Austin and Kabeteck Brown Kellner, LLP of Los Angeles, and the law office of Gary L. Bledsoe.
For more information or to report your story, please contact Angela Ciccolo, Esq. of the NAACP at (877) NAACP-98 or (410) 580-5777 or http://www.NAACP.org
Local NAACP Contact Info:
Woodie Rucker Hughes, President of Riverside NAACP, (951) 686-2227
Walter Jarman, President of San Bernardino NAACP, (909) 887-7411.