NAACP Calls for National 'Day of Action' Against Mortgage Discrimination

BALTIMORE, July 2 /PRNewswire/ -- NAACP units across the country participated in a national 'Day of Action' against discriminatory mortgage lending today by demanding that several of the nation's top lenders -- including Citi, HSBC, WaMu, GMAC and JP Morgan -- make amends for discriminating against African American borrowers and eliminate discriminatory polices and practices for good.

According to the NAACP and its lawsuit against 17 major lenders, African American borrowers were given loans with higher interest rates and other poor terms solely because of their race.

The Day of Action was marked by nationwide events in more than 20 locations includingNew York,Chicago,Baltimore,St. Louis,Detroit,Las Vegas, suburbanAtlanta,Salt Lake City,Memphis,Seattle and southern California. NAACP leaders, other officials and community members held events at lending institutions and in affected neighborhoods to highlight the pervasive and systemic discrimination against African Americans within the mortgage industry and to demand an end to it.

"Every one of us deserves equal access to the 'American dream' of homeownership," said NAACP Interim General Counsel Angela Ciccolo. "Making amends is just the beginning. We want to make sure African Americans are never victimized by the lending industry again. This discrimination was nationwide and cut across income-levels. People with six-figure incomes, significant down-payments and who had owned several homes before were not immune from being discriminated against because of their race."

The NAACP filed a class action lawsuit against 17 of the nation's largest lenders last July for discriminatory lending practices. The defendants are Washington Mutual, Inc., Citimortgage, Inc., HSBC Finance Corporation, GMAC Mortgage Group, LLC, GMAC Residential Capital, J.P. Morgan Chase & Co., Chase Bank USA NA, Fremont Investment & Loan, Option One Mortgage Corporation, WMC Mortgage Corporation, Accredited Home Lenders, Inc., Bear Stearns Residential Mortgage Corporation dba Encore Credit, First Franklin Financial Corporation, National City Corporation, First Tennessee Bank dba First Horizon National Corp., Long Beach Mortgage Company, and Suntrust Mortgage.

"The only difference between the victims in this case and other customers is the color of their skin," said Brian Kabateck, who is co-lead counsel on the suit. "They had the same credit, the same income and the same qualifications. But because they were African American, they were ripped off."

Discriminatory loans are not just affecting individual borrowers, but entire families and communities as well.

"Owning a home means much more than not paying rent. Home ownership is the key to building the wealth that pays for college, supports retirement, and is reinvested in communities," said NAACP Interim President & CEO Dennis Courtland Hayes. "Discrimination is keeping communities and the next generation of young people from moving forward."

Recent research, including federal data, proves the rampant discrimination in mortgage lending:

-- A July 2007 report by Freddie Mac (Federal Home Loan Mortgage Corporation) showed that minority borrowers pay higher annual percentage rates on mortgage loans than non-minorities with equal income and credit risk. For instance, in 2005, African American borrowers paid an average of 128 basis points more for loans than their white counterparts. In the subprime market, the difference was even greater -- 275 basis points more.

-- A 2006 Center for Responsible Lending study that found when income and credit risk were equal, African-Americans were 31 percent to 34 percent more likely to receive higher-rate, more expensive subprime loans than Caucasians.

-- A 2008 study by United for a Fair Economy cites federal data showing people of color are more than three times more likely to have subprime loans: high-cost loans account for 55% of loans to African Americans, but only 17% of loans to Caucasians.

The study also estimated losses of between $164 billion and $213 billion for subprime loans taken by people of color during the past eight years. This is thought to be "the greatest loss of wealth for people of color in modern US history."

-- The National Community Reinvestment Coalition found in 2006 that lending institutions in six major metropolitan areas were engaged in "pervasive discriminatory and predatory practices" involving high-cost subprime loans to African-Americans. The metro areas were:Baltimore, Washington,Chicago,Los Angeles,St. Louis andAtlanta.

In addition to finding discrimination nationwide, the study found that people of all income levels -- not just low or middle -- were victimized. For example, the study found that inBoston, 73 percent of high income ($92,000 to $152,000 annual salary) African Americans received subprime loans in 2005.

-- The Federal Reserve Board has concluded that African Americans were more likely to pay higher prices for mortgages than their Caucasian counterparts.The United States Inspector General cited the Federal Reserve Board report as showing "significant" differences, making it "clear" that African-Americans were "much more likely to get higher-priced loans" than Caucasians.

Founded in 1909, the NAACP is the nation's oldest and largest civil rights organization. Its members throughoutthe United States and the world are the premier advocates for civil rights in their communities, conducting voter mobilization and monitoring equal opportunity in the public and private sectors.

SOURCE NAACP

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