NAACP Sues Lenders Over Subprime Bias

The National Association for the Advancement of Colored People has filed a class action lawsuit against 12 major mortgage lenders alleging that they violated the Fair Housing Act by "systematically" placing blacks into higher-cost subprime loans."African Americans who received loans from these lenders were over 30% more likely to be issued higher-rate loans than Caucasian borrowers with the same qualifications," according to the lawsuit filed July 11 in a U.S. district court in California. The lawsuit argues that subprime loans are typically laden with improperly disclosed fees and excessive prepayment penalties. "African Americans are more than three times as likely as Caucasians to be put into one of these equity draining subprime loans," the suit contends. NAACP chairman Julian Bond is urging African-American borrowers who bought or refinanced a home with the named lenders to "come forward and tell us their stories, or at least re-examine their mortgages" to "help us correct these egregious and demoralizing practices." The NAACP filed the lawsuit against Long Beach Mortgage Co., Citigroup Inc., BNC Mortgage Inc., Accredited Home Lenders Inc., Bear Stearns Residential Mortgage Corp., First Franklin Financial Corp., HSBC Finance Corp., Washington Mutual Inc., Ameriquest Mortgage Co., Fremont Investment and Loan, Option One Mortgage Corp., and WMC Mortgage Corp.