NAACP Accuses Banks of Forcing African-Americans Into Risky Home Loans

Wells Fargo and HSBC forced black borrowers into risky, subprime home mortgages while white borrowers with the same qualifications were given loans with lower interest rates, according to class-action lawsuits expected to be filed by the NAACP.

An attorney for the National Association for the Advancement of Colored People said his group plans to file lawsuits in federal court in Los Angeles today accusing the banks if discriminating against black home-buyers seeking mortgages.

According to the lawsuits, black homebuyers were 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. Also, blacks were directed into subprime mortgages in larger numbers than white borrowers with the same credit scores, down payment amounts, and incomes, according to the NAACP suits.

The NAACP accused the banks of engaging in “systematic, institutionalized racism” in the granting of home loans.

A Wells Fargo spokesperson strongly denied the allegations and said the bank has “never tolerated, and will never tolerate, discrimination in any way, shape or form in any of our business practices, products, or services.” The bank spokesperson dismissed the NAACP allegations as “totally unfounded and reckless.”

Predatory Lending Against Blacks Alleged

Amara Weaver, an NAACP member from Milwaukee, is one of the people said to be joining in the class-action lawsuits, which have yet to be filed. Weaver, a human resources director for a social services agency, said when she bought a house in 2004, she was promised a low, fixed-rate loan of $40,000 based on her steady income and solid credit scores.

However, when she signed the paperwork to finalize the loan just before being handed the keys to her new home, Weaver said she was shocked to learn that the rate was actually 11 percent. Weaver said she was “blown away” by the high interest rate, but felt she had no choice at that point but to agree to the terms. She said she felt “violated” by her lender.

‘Tens of Thousands of Victims’

An NAACP attorney said that many blacks across the United States were forced into home loans with bad terms. Determining precise numbers of victims of predatory lending is difficult because banks keep much of their internal data private, the attorney said.

In the lawsuits, the NAACP is seeking to reform banks to improve transparency of the loan process, community education work, and training of loan officers.

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