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A consumer advocate group has filed a complaint against one nonprime lender and its investment banker parent for not making loans to minorities, while another group has sued several lenders because they did make subprime loans to minorities.
Morgan Stanley and its subprime arm Saxon Mortgage has been hit with a civil rights complaint from the National Community Reinvestment Coalition claiming the lender discriminates against minorities. NCRC claims the lender “intentionally discriminated” against borrowers in African American, Latino, Native American, Asian and Pacific Islander communities. The complaint was filed with the U.S. Department of Housing & Urban Development and the Securities and Exchange Commission and is “the first challenge against a Wall Street securitizer that alleges redlining under the Federal Fair Housing Act,” the coalition said in a statement. Policies used by Morgan Stanley and Saxon “restrict the availability of loans by requiring applicants to satisfy minimum property values,” the NCRC said in the statement. “These policies … prevent many borrowers whose homes are valued at less than $100,000 from obtaining a loan from Morgan Stanley, regardless of their credit worthiness,” it said. “Morgan Stanley takes these allegations very seriously,” spokeswoman Jennifer Sala told MortgageDaily.com in an e-mail statement. “The mortgage lending policies of Morgan Stanley and its affiliates do not discriminate on the basis of race or national origin. We are confident the allegations will prove merit less and would welcome the opportunity to discuss our practices with NCRC.” The complaint is among others recently filed against major mortgage lenders by minorities. In mid-July, the NAACP announced it filed suit in Los Angeles federal court against 14 of the nation’s largest lenders alleging “systematic, institutionalized racism in subprime home mortgage lending.” “Lenders named in the suit, on average, made high cost subprime loans to higher qualified African Americans 54 percent of the time compared to 23 percent of the time for Caucasians,” NAACP Interim President and CEO Dennis Courtland Hayes said in a statement. Just two days later, three African American mortgage borrowers in Boston accused Countrywide Home Loans of racial discrimination, alleging the company charged them more for a subprime loan than others seeking loans. The suit seeks class action status and reimbursements of more than $100 million to African American customers of Countrywide and its subprime unit, Full Spectrum Lending Inc. But Countrywide denied the accusations. “No other mortgage lender has done more to lower the barriers to homeownership among historically underserved communities than Countrywide, and we do not tolerate discrimination in any of our lending practices,” the company said in a statement. Like other lenders Countrywide is abandoning much of its subprime lending in the wake of the continued fallout of the market. Countrywide also announced it would no longer “originate any subprime loans other than those eligible for sale or securitization under programs supported by Fannie Mae, Freddie Mac or the FHA.” |
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