By Charlene Crowell, NNPA Columnist –
In recent months a series of settlements by the federal Department of Justice signal that charges of discriminatory lending not only have validity; but occur with amazing similarity in different locales. In the past week, a lawsuit against mortgage lending practices in the St. Louis metropolitan area ended with a $1.45 million settlement to resolve charges of discriminatory patterns and practices. Midwest Bank Centre agreed to open a full-service branch in a majority African-American area of the metro. Additionally other terms of the settlement call for $900,000 to increase the amount of lending to majority African-American neighborhoods;$300,000 for consumer education and credit repair programs; and $250,000 for outreach to promote their products and services to prospective customers.
In a separate but related action, Nixon State Bank, of Nixon, Texas will pay nearly $100,000 to settle a lawsuit that charged with bank engaged in discriminatory practices on the basis of national origin. Latino borrowers, according to the complaint, were charged higher prices on unsecured consumer loans, a violation of the Equal Credit Opportunity Act.
If these settlements sound familiar, you’re right. Earlier this year, a similar settlement focused on Detroit and the practices of Citizens Republic Bancorp and Citizens Bank of Flint, Michigan. In this settlement, the banks agreed to open a loan office in a Detroit African-American neighborhood and invest approximately $3.6 million in Wayne County.
In December 2010, Prime Lending, a national mortgage lender with 168 offices in 32 states, agreed to pay $2 million to end a lawsuit that alleged African-American borrowers were charged higher annual percentage rates of interest for prime fix-rate home loans and for home loans guaranteed by the Federal Housing Administration and Department of Veterans Affairs. Terms of this settlement required Prime Lending to begin in 2011 to implement policies to prevent discrimination.
Beyond these four DOJ settlements, two additional lawsuits are still pending on behalf of residents in Baltimore, Maryland and Memphis, Tennessee. Both of these cities have alleged that Wells Fargo Bank violated fair lending laws that resulted in a higher number of unnecessary foreclosures in their respective locales. Both cities allege that disproportionate foreclosures and resulting economic losses were caused by steering Black consumers into high-cost, unsustainable mortgage loans.
In Brooklyn, New York, eight African-American homeowners were awarded more than $1 million in a jury trial against a developer, United Homes. While the defendant already announced plans to file an appeal, plaintiffs maintain that their respective purchases of renovated and flipped homes were all appraised at inflated values reflected in significantly higher sales prices.
It seems ironic that despite a series of laws enacted years ago to prevent these kinds of practices that in 2011, some of America’s lenders seem to be thumbing their noses to fair lending for all Americans. Million-dollar settlements are not enough to compensate communities of color for all the devastating financial harm that their illegal practices have wrought.
According to the recently-released 2011 State of the Nation’s Housing by the Joint Center for Housing Studies of Harvard University, nearly half of foreclosure auctions in 2010 were located in just 10 percent of the nation’s 65,000 census tracts. According to the new report, homeownership rate declines for African-Americans (3.8 percent) and Latinos (2.1 percent) have outpaced those for white households (1.5 percent). As a result, these homeownership declines have erased the homeownership gains of the past two decades.
CRL’s own research previously found that $350 billion of wealth has been lost to African-American and Latino families due to foreclosures and their rippling effects on neighborhoods.
In the 19th Century, newly-freed slaves were promised 40 acres and a mule. In the 20th Century, African-Americans were joined by progressive organizations and individuals to fight and win civil rights. In 2011, our silver rights are the issue.
Charlene Crowell is the Center for Responsible Lending’s communications manager for state policy and outreach. She can be reached at: Charlene.firstname.lastname@example.org.
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