Cleveland is not alone. According to a January 8, 2008, ABC News report, Baltimore was the first city to try to recoup losses caused by foreclosures. However, 
Baltimore is going one step further in its suit against Wells Fargo and other lenders. The city is alleging discrimination, saying that minority populations and the poor were targeted by subprime lenders and pushed into loans with predatory terms and conditions. A January 9, 2008, Associated Press report said that "the lawsuit alleges that San Francisco-based Wells Fargo targeted black neighborhoods for high-risk and unfairly priced loans - a practice known as reverse redlining, which is prohibited under the federal Fair Housing Act."
Baltimore officials are not the only ones taking a hard look at the racial and economic class distribution of subprime loans. On December 20, 2007, the Atlanta Business Chronicle reported that the Georgia NAACP "will take part in an amended class action lawsuit unveiled Wednesday against major national mortgage lenders." Washington Mutual, Sun Trust Banks Inc., GMAC Mortgage Group, and First Horizon National Corp. are among those that are being sued. This class action law suit "alleges 17 national home lenders made subprime home loans to African American buyers, even when the home buyers qualified for more traditional loans."
While, granted, it is true that many cities throughout the nation are having to clean up the wreckage left behind as risky subprime loans collapse into foreclosure, it is also important to remember that the subprime lending industry did make homeownership a reality for many people that traditional lenders would not do business with by extending home loans with more flexibility. The majority of those with subprime mortgages are making their payments and are keeping their homes. It is not fair to lump all subprime lenders into the category of predatory lenders.
Certainly those that have violated industry regulations or federal or local laws should be held responsible for their behavior. Discrimination must not be tolerated. However, it should be noted that a good portion of the subprime foreclosures are due to borrowers not understanding the agreements they were entering into, something that is their responsibility, and the industry as a whole cannot be held responsible for ill-informed or poor decisions. Speculation is another factor in the wave of foreclosures, and the lending industry should not be held responsible for others' business losses, nor should the taxpayer be financially responsible, via bail-out, for the losses that lending institutions and investors are taking.
Baltimore officials are not the only ones taking a hard look at the racial and economic class distribution of subprime loans. On December 20, 2007, the Atlanta Business Chronicle reported that the Georgia NAACP "will take part in an amended class action lawsuit unveiled Wednesday against major national mortgage lenders." Washington Mutual, Sun Trust Banks Inc., GMAC Mortgage Group, and First Horizon National Corp. are among those that are being sued. This class action law suit "alleges 17 national home lenders made subprime home loans to African American buyers, even when the home buyers qualified for more traditional loans."
While, granted, it is true that many cities throughout the nation are having to clean up the wreckage left behind as risky subprime loans collapse into foreclosure, it is also important to remember that the subprime lending industry did make homeownership a reality for many people that traditional lenders would not do business with by extending home loans with more flexibility. The majority of those with subprime mortgages are making their payments and are keeping their homes. It is not fair to lump all subprime lenders into the category of predatory lenders.
Certainly those that have violated industry regulations or federal or local laws should be held responsible for their behavior. Discrimination must not be tolerated. However, it should be noted that a good portion of the subprime foreclosures are due to borrowers not understanding the agreements they were entering into, something that is their responsibility, and the industry as a whole cannot be held responsible for ill-informed or poor decisions. Speculation is another factor in the wave of foreclosures, and the lending industry should not be held responsible for others' business losses, nor should the taxpayer be financially responsible, via bail-out, for the losses that lending institutions and investors are taking.
Type in Your Comments Below