NAACP Class Action Lawsuit on Subprime Loans

Filed Under Uncategorized by Rachel

Can we file this under the category of news that’s not really news? The NAACP is involved in a class action law suit against several banks including a few of the banks taking federal bailout money:

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 will 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 3 1/2 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.

This isn’t the least bit surprising to those of us have followed the sub-prime mortgage issue.

Comments

8 Responses to “NAACP Class Action Lawsuit on Subprime Loans”

temple on March 13th, 2009 11:15 pm

“This isn’t the least bit surprising to those of us have followed the sub-prime mortgage issue.”

Does this statement mean that you’re/they’re not surprised about the lawsuit or that you’re/they’re not surprised by the fact that there was a disparity between whites & blacks?
Rachel on March 14th, 2009 12:32 am

I guess my pronoun needs an antecedent.

By this I meant, the disparity in lending.
Adam on March 14th, 2009 3:51 pm

While there are a lot of vantage points that this can be viewed from, there is no doubt in my mind that people of color have been disproportionately affected by this.

In many areas this was a profitable venture for lenders because the expectation on the part of the buyer was that the house would be “flipped” before the adjustable interest rate would kick in.

In other areas, the banks would simply package the loans into bonds and sell them to investors. The bonds would be bought and sold by companies and investors everywhere.

Then outifts like AIG & Lehman come along and say, “Hey, let’s “insure” those high risk bonds based on those mortgages”. They charge a small monthly premium (like for auto insurance) in exchange for insurance in case the bond “crashes”. Hence, the term Credit Default Swap.

Well mortgage payments could not be paid, banks could not pay interest on their bonds sold to investors, and investors turned to their insurance contracts and “manure” hit the fan.

What is really bad is that many of the companies that accepted the mortgages, and the companies that bought the bonds, and the companies that insured the bonds are stock-owned companies whose shares form, in part, the foundation of investments for everyone else ranging from hospitals, to charities, to universities, and corporations.

Sorry for all the “investment speak”. The analysts in the company I work for watched in horror as this unfolded. Fortunately, our folks were wise enough not to dabble in this back in the late 90’s into the 2000’s. It was short-sighted way for investors to make a lot of money really fast.
temple on March 15th, 2009 12:23 pm

Thanks for clearing that up for me.

This action by the NAACP is very refreshing. Finally an issue of substance as opposed to focusing on some of the craptastic stuff they usually target like supporting r kelly’s perversions.
rosario Nunez on March 28th, 2009 6:40 pm

Not only the black people Hispanice people have been targeted big time My sister in law in fl. she bought a townhome with a 80,000 down payment and they gave her and adjustable rate, when I initially apply for a loan the first question they asked me was do you have a college degree? and boom they gave one of those bad mortgages, my poor sister in law who is a single mother lost her townhome and was asked to go on bankruptcy, and me I am starting foreclosure and where do we go to get help? nobody protect the consumer now our credit rating is ruined and where are we going to live in a tent in NJ with the cold?
RONALD O. JOSEPH, SR. on May 4th, 2009 3:45 pm

In my last comment I ment Debt to Equity Ratio.
Katy Brown on May 11th, 2009 2:12 pm

Hi Rosario,
I worked in the mortgage business and there are many mortgage brokers who are unethical…and they don’t give a hoot about your race or nationality, they only want to see the color of your money. Thousands of non-black and non-hispanic Americans are in the same boat, including my sister. It’s a crying shame that these theiving brokers and lenders aren’t held accountable for their cold and calculated abuse of borrowers.
ISIS on July 24th, 2009 6:21 pm

WHY ARE WE, CONSUMERS, NOT EXPRSSING OUR OUTRAGE OVER WHAT THESE CROOKS (LENDERS/BANKERS) HAVE DONE TO US AND OUR COMMUNITES? WHY ARE WE JUST WRITING ABOUT IT? WHEN ARE WE GOING TO MAKE OUR VOICES HEARD?