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Mortgage Lawsuits News | Mortgage Litigation Index
Mortgage industry lawsuit news and mortgage litigation coverage. Stories about legal settlements, judgments and mortgage class actions.


Subprime Lawsuits Expanded to 14 Companies

NAACP v. Wells Fargo, HSBC

March 13, 2009

By MortgageDaily.com staff


A civil rights group added two more companies to the list of lenders it claims unnecessarily steered well qualified black borrowers into high-priced subprime mortgages. But several of the companies being sued are no longer in business, while subprime lending has been abandoned by the rest.

The National Association for the Advancement of Colored People announced today that it filed one lawsuit against Wells Fargo Bank & Wells Fargo Home Mortgage and another against HSBC Mortgage & HSBC Bank.

The group claims that the lenders' subprime lending operations engaged in systematic, institutionalized racism.

Blacks who financed through the companies were more than 30 percent more likely to see high subprime interest rates than whites with the same qualifications, the NAACP said.

"In fact, upper income African Americans are more than twice as likely to receive higher-cost loans as their lower income white counterparts," the announcement said.

While a spokeswoman for HSBC - North America told MortgageDaily.com in a statement that the company does not comment on litigation, she did indicate that it is confident that its fair lending practices are fully compliant.

Wells Fargo & Co. quickly issued a statement denying the allegations -- calling them "totally unfounded and reckless." The San Francisco-based instituion sternly said it does not tolerate discrimination and has a responsible lending record. It noted that market factors such as the customer's credit profile, loan-to-value and loan type determine pricing.

Wells said it was puzzled by the lawsuit because it has been working on a partnership with the NAACP over the past two years.

"We intend to vigorously defend these unfounded allegations," Wells said. "We are confident we will prevail."

The NAACP said it has already filed similar lawsuits against the following lenders:

  • Accredited Home Lenders Inc.
  • Ameriquest Mortgage Co.
  • Bear Sterns Residential Mortgage Corp. d/b/a Encore Credit
  • Chase Bank USA
  • CitiMortgage
  • First Franklin Financial Corp.
  • First Tennessee Bank d/b/a First Horizon National Corp.
  • Fremont Investment & Loan
  • GMAC Mortgage Group LLC
  • GMAC ResCap
  • Long Beach Mortgage
  • SunTrust Mortgage

Those lenders allegedly made subprime mortgages to "higher qualified African Americans 54 percent of the time, compared to 23 percent of the time for Caucasians," the group said.

The NAACP claims it is attempting to "change the policies and practices" that end up unnecessarily landing black borrowers in high-cost loans. But many of the defendants have already ended operations and none are originating subprime mortgages. Among the deceased are Ameriquest, First Franklin, Fremont and Long Beach.

A judge has reportedly denied a joint motion by the earlier group of defendants. NAACP was found to have standing to bring the lawsuit, and the defendants are now obligated to turn over evidence about their mortgage policies and practices.

The civil rights group said that one of the earlier defendants has preliminarily settled the case, while other defendants are actively negotiating settlements.


Related:
Lenders Losing Lawsuits
Borrowers appear to be winning a number of lawsuits filed against mortgage companies, an analysis of previously covered litigation by MortgageDaily.com indicated. Two of the cases are seeking to stave off foreclosures while another is targeting fees charged by state regulated lenders in Maryland. One lawsuit accuses several lenders of steering black borrowers into higher cost loans.

Lenders Defend Subprime Practices
Allegations made in lawsuits recently filed against some of the country's largest mortgage companies are just plain wrong -- according to the defendants. The lenders, who say their subprime programs have helped minorities get into homes, are accused of discriminating against African-American borrowers by subjecting them to loans with high interest rates and fees.


NATIONAL ASSOCIATION FOR THE ADVANCEMENT OF COLORED PEOPLE (NAACP), on Behalf of Itself and All Others Similarly Situated, as well as on Behalf of the General Public and Acting in the Public Interest, Plaintiff, vs. Wells Fargo Bank, N.A., and Wells Fargo Home Mortgage, Inc., Defendants.
CASE NO. SACV 07-0794, March 2009 (U.S. District Court for the Central District of California)

NATIONAL ASSOCIATION FOR THE ADVANCEMENT OF COLORED PEOPLE (NAACP), on Behalf of Itself and All Others Similarly Situated, as well as on Behalf of the General Public and Acting in the Public Interest, Plaintiff, vs. HSBC Mortgage Corporation (USA), a corporation, and HSBC Bank USA, N.A., Defendants.
CASE NO. SACV 07-0794, March 2009 (U.S. District Court for the Central District of California)

Predatory Lending News
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Nonprime and Subprime News | Subprime Statistics
Stories about non-QM products. Coverage of subprime, Alt-A and
hard money lending. Home-equity loans and home-equity lines of credit.



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