Loan Discriminations ?

Well it looks as if a major lender on home mortgages
has not only come under fire but also is being sued
for discriminating against minorities. Housing loan
discrimination is still one of this countries biggest
problems especially when it keeps people out of
quality housing. What do you think about this issue?


When mortgage lenders refuse to write loans on central city row houses, does that violate federal fair housing rules? What about refusing to write mortgages on houses in entire communities dominated by specific ethnic groups, such as Native Americans? Or not offering mortgage loans for houses that may be used, in part, to accommodate disabled adults in a foster care-like setting? Just how much protection do fair lending and other civil rights laws provide to mortgage applicants who are rejected not because of their credit scores or financial capacities, but because of the location, type or possible use of their home?

A major consumer group is mounting a campaign aimed at nailing down the answers. The National Community Reinvestment Coalition filed suit May 9 against NovaStar Mortgage Inc., a subsidiary of publicly traded NovaStar Financial, based in Kansas City, Mo. The suit, filed in federal district court in Washington, D.C., charges that NovaStar repeatedly has violated the Fair Housing Act by refusing to make mortgages on row houses in downtown Baltimore, on homes located on Indian reservations anywhere in the country, or on houses that may be used, in part, to shelter and care for disabled adults. Such bans have "no business justification," according to the suit, and illegally discriminate against African Americans, Latinos, Native Americans and disabled individuals.

A spokesman for NovaStar, Richard Johnson, called the charges "baseless" and said the suit "makes deliberate misrepresentations" about NovaStar's policies. Johnson confirmed that the company does restrict mortgage lending in the categories identified by NCRC but said there are valid business-related reasons for each policy. For example, in the case of row houses in Baltimore, said Johnson, there had been widespread appraisal fraud involving row houses in prior years, making the company leery about extending new loans.

But officials at NCRC said those problems dated back eight years or more and have long been corrected. John Taylor, NCRC president and chief executive, said that "NovaStar intentionally structured its underwriting to exclude … persons with disabilities and row house neighborhoods where African Americans and Latinos reside," as well as mortgages to Native Americans who live in "tribal communities" across the country. The firm "discriminated against people with the least amount of ability to fight back," Taylor said. "They did it because they thought they could get away with it."





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