Cooler but still well above normal this week

MPR News helps you turn down the noise and build shared understanding. Turn up your support for this public resource and keep trusted journalism accessible to all. 

Turn Up Your Support

(AP) - The NAACP is accusing Wells Fargo and HSBC of forcing black homebuyers into subprime mortgages while white buyers with identical qualifications
got lower rates.

      Class-action lawsuits were to 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 3½ 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.


      Melissa Murray, vice president of corporate communications for
Wells Fargo & Co., called the lawsuit "totally unfounded and
reckless." The bank is receiving federal bailout funds.


      "We have never tolerated, and will never tolerate,
discrimination in any way, shape or form in any of our business
practices, products, or services," Murray said.


      HSBC said it does not comment on litigation. 

"HSBC stands by
its fair lending and consumer protection practices, and we are
confident that we are treating our customers fairly and with
integrity," said Neil Brazil, vice president for public affairs.


      An NAACP member, Amara Weaver of Milwaukee, said she was one of
the victims of predatory lending. She bought her first home in
1984, receiving a 6.25 percent fixed-rate mortgage. She says she
had a steady job as a human resources director for a social
services agency, never missed a mortgage payment and maintained
excellent credit.


      In 2004, she wanted to buy the house next door for her son to
live in. She said the bank promised her a low fixed rate for a
$40,000 loan, but at the closing, when reading the fine print, she
noticed that the rate was actually 11 percent.


      "I was blown away," said Weaver, an NAACP member. "I didn't
have any choice (but to sign). ... It made me feel violated."


      Similar NAACP lawsuits are pending against a dozen other
subprime lenders.


      "This is systematic, institutionalized racism," Tighe said.
"Once you take out factors relative to income and credit risk, the
only difference between the borrowers is the color of their skin."


      Tighe estimated that "tens of thousands" of blacks had been
forced into bad loans, but said it was difficult to gauge the scope
of the problem because banks keep much of their internal data
private. 


The lawsuits could force banks to divulge closely guarded
information, such as how banks can determine the race of a loan
applicant and how federal bailout funds are being spent.


      The NAACP is seeking reforms from the banks such as increased
transparency in the loan process, educational outreach and internal
training.

Gallery

Homeowners in Minn. expect to benefit from Obama foreclosure plan

Study: Many minorities cut out of prime loan market

Preventing foreclosure, one door at a time

Business and Economic News

Crime, Law and Justice

Social Issues

The NAACP is accusing Wells Fargo and HSBC of forcing black homebuyers into subprime mortgages while white buyers with identical qualifications
got lower rates.

Wells Fargo Reports 11 Percent Drop In Quarterly E

NAACP says Wells Fargo steered blacks to bad loans

Go Deeper.

Like this?

News you can use in your inbox