Blacks vulnerable to predatory lenders - WMC Action News 5 - Memphis, Tennessee

Blacks vulnerable to predatory lenders

CHICAGO, IL (CNN) - Some jilted homeowners are taking on subprime lenders – with some high-powered help. Illinois Attorney General Lisa Madigan filed suit against one mortgage giant earlier this year, alleging they used discriminatory and predatory practices in their lending.

For homeowners Glendaree and William Wilson, it might soon be too late. The couple is fighting to keep the home they've lived in for five years.

"If I keep working, I can hold on a while," William Wilson said. "But I don't know how long my job is going to last now, you know?"

In 2006 the Wilsons took out a second mortgage to add bedrooms for their foster children. But those bedrooms came with a hefty price tag: A subprime loan with $12,000 in closing costs, $1,200 in monthly payments and a required lump-sum payment of $100,000 in the final month to pay off the balance of the loan.

When all is said and done, there will be no equity in the property.

A leader in the fight against both predatory and discriminatory lending, Madigan filed suit against mortgage giant Countrywide, now owned by Bank of America.

"We have communities who for the large part didn't have access to mortgages, didn't have access to credit and suddenly they're being targeted," she said.

Madigan is alleging in the suit that the mortgage companies used lending practices that violated fair lending and civil rights laws. Bank of America denies that, and said it vows to "vigorously defend against the allegations."

"Statistics that we are able to derive indicate that if you are African American making more than $100,000 you were more likely to be put into a subprime loan than if you were a white person making less than $35,000," Madigan said. "It's discrimination."

Those statistics are from a 2007 investigation by the "Chicago Reporter." Last year, Madigan sued Wells Fargo for similar practices. That lawsuit is still pending.

"With the overarching goal of doing what is right for our customers, Wells Fargo has a long-standing history of being a responsible, leading lender to diverse populations," the company said in a prepared statement.

Madigan said she believes the banks are, in fact, targeting black and poor people.

Richard Thomas was a widower when he first moved into his middle class Chicago neighborhood. He is now part of a class action lawsuit against Ameriquest, claiming he also was a victim of predatory subprime lending.

"I just want a comfortable place, a nice comfortable place to live, and I don't mind paying for it, but just don't rip me off," Thomas said.

The Center for Responsible Lending estimates that 1 percent of black homeowners already have lost their homes to foreclosure or are now in imminent risk. Even living near a foreclosed property in a black or Latino community can reduce the value of a home.

"It really makes you feel bad there's so many people out there trying to work and trying to make ends meet, and they can't do it," said Glendaree Wilson, through her tears, "because someone is ripping them off."

The Wilsons believe they will ultimately lose their home to foreclosure.

"It's in the Lord's hands," she said.

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