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Black homeowners forced to subprime?
Antlee Accius sits in the former living room of a foreclosed home.
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Steve Chiotakis: Today's the day we'll also see class-action lawsuits filed against two big banks. Civil rights organization the NAACP claims Wells Fargo and HSBC forced African-Americans into subprime mortgages. Here's Ashley Milne-Tyte.
Ashley Milne-Tyte: The NAACP says when black and white buyers had identical financial qualifications, like income, credit scores and down payments, whites were given lower interest rates. The group charges that black home buyers are three and a half times more likely than whites to get a subprime loan.
The lawsuits will be filed today in a federal court in Los Angeles. The suits could force banks to give up information on how the race of a loan applicant can be determined. It could also shed light on how federal bailout money is being spent. Both Wells Fargo and HSBC have received bank rescue funds.
Neither bank is commenting on the lawsuit. In 2007, the NAACP sued 19 banks for charging African-Americans higher interest rates.
I'm Ashley Milne-Tyte for Marketplace.
Could this be as simple as a commissioned salesperson selling a higer intrest loan to earn a higher commission? How many of the sub-prime borrowers knew that (most?) mortgage brokers work on commission just like car salesmen? How many of the folks that refused to take anything except a 30-yr fixed rate understood this? An educated consumer is much more likely to get a better deal. Often this education comes from getting a bad deal the first time.
