(March 15, 2009) – Friday, the National Association for the Advancement of Colored People sued two of the nation’s largest lenders alleging they subjected Black homeowners to, “systematic, institutionalized racism.”
The NAACP sued Wells Fargo and HSBC arguing Black homeowners were 30 percent more likely to be issued higher cost, sub-prime loans than White borrowers with the same qualifications.
Sub-prime mortgages are supposed to allow people who don’t qualify for lower interest rates to borrow money at higher rates.
“It is time for these lenders to be held accountable,” said NAACP president Benjamin Jealous in a statement. “We look forward to forcing real change and real relief through this lawsuit.”
The two separate lawsuits filed in the U.S. District Court in California, cites studies that indicate lending disparities are pervasive and often based on race. In fact, upper income Black Americans are twice more likely to receive higher rate loans than lower income Whites.
According to the NAACP, the National Community Reinvestment Coalition’s most recent study shows discrimination against people of color persists in mortgage lending. And the Federal Reserve Board, U.S. Department of Housing and Urban Development and the FDIC have all made similar claims.
“These banks are getting billions in bailout money yet think they can get away with business as usual,” said Austin Tighe, co-lead counsel for the NAACP. “Predatory lending policies and practices are legally actionable, morally reprehensible, and fiscally irresponsible.”
“It is time for these lenders to be held accountable.”
Both Wells Fargo and HSBC denied the allegations.
“The NAACP’s allegations are totally unfounded and reckless,” said Wells Fargo spokeswoman Melissa Murray in a statement. “We have never tolerated, and will never tolerate, discrimination in any way, shape or form in any of our business practices, products or services.”
Murray added that Wells Fargo has been, “working with the NAACP for the past two years to develop a partnership that would benefit the NAACP, its constituents and our communities, so we are dismayed that the NAACP has chosen to abandon that constructive dialogue in order to pursue this litigation.”
The NAACP has already sued other mortgage industry leaders, making the same claims made against Wells Fargo and HSBC.
Lenders named in those suits include Accredited Home Lenders, Ameriquest Mortgage Co., Bear Stearns Residential Mortgage Corp. and Chase Bank USA.
“Lenders named in the suits, on average, made high cost sub-prime loans to higher qualified African Americans 54 percent of the time, compared to 23 percent of the time for Caucasians,” said NAACP Interim General Counsel Angela Ciccolo.
“Our lawsuit aims to change the policies and practices which lead to those results