A federal class action lawsuit was filed by the NAACP on July 11, in the United States District Court of Central California. The lawsuit names Ameriquest Mortgage Co. along with several other mortgage giants.
Recent reports across several agencies cite the prevalence of sub-prime mortgages and predatory lending practices as the root of foreclosures rising. According to the NAACP foreclosures are happening more often to African-American families.
The complaint states, in 2006 the Center for Responsible Lending reported that while taking into account credit risk and income, it was still 31 to 34 percent more likely for an African-American family to receive a higher subprime loan rate. Disparities between African-Americans and Caucasians with the same risk factors were large and statistically different.
The document includes a study conducted by the National Community Reinvestment Coalition that 54 percent of the time, African-Americans who qualify for better loan rates are still sold subprime loans, while only affecting Caucasians 23 percent of the time.
“The lawsuit does not request an amount of money from the court, stating “awarding attorney fees and costs to Plaintiff and members of the Class as allowed by law; and for such other relief as the Court deems just under the circumstances,” but does request the court: find the defendants in violation of the Fair Housing Act, the Equal Credit Opportunity Act and the Civil Rights Act; stop them from engaging in the aforementioned conduct; force them to conform their lending practices to current law and have them publish information and provide programs “to fully inform African Americans about their rights to equal treatment with respect to home loans and subprime loans.”