Major Bank Agrees To Fair Lending PrincipalsBy Jeffrey Hess | Published 14 Jul 2011 04:29pm |
One of the biggest home loan lenders in the country is agreeing to a set of principals intended to reduce unfair lending practices. MPB's Jeffrey Hess reports that the problem of unfair loans is particularly troublesome among African-Americans in Mississippi.
Bank of America recently agreed to a list of nine principals, written by the NAACP, intended to end lending discrimination based on race, and make sure borrowers understand the loan and can repay it.
Dedrick Muhammad with the NAACP says African-Americans around the country were especially vulnerable to unfair loans.
"Because of a history of African-Americans not having access to good loan products, or to loan products at all, there was a deep need and desire that was exploited by sub-prime lenders," Muhammad said.
Muhammad says Bank of America is the second bank, along with Wells Fargo, to agree to the principals.
Glenda Gabriel is the Neighborhood Lending executive for Bank of America
“Bank of America is a strong advocate of responsible lending and is committed to providing more transparency and clarity to help customers make informed decisions,” said Gabriel “Our mission is to provide leadership in homebuyer education and one way we can do that is through our strong partnership with the NAACP.”
Unfair lending to African-Americans was especially bad in Mississippi during the run up to the housing bust.
Ed Sivak with the Mississippi Economic Policy Center says, at the height of the bubble, 70-percent of loans made to African Americans were sub-prime.
"If you look at the rate of high interest rate loans to whites during the same time period it was only 30%. So it was less than half the rate for African-Americans. At the same time, this rate was still higher than any of the other southeastern state," Sivak said.
Sivak says those type of loans greatly increased the odds of foreclosure, compared to more conventional prime loans.
Marie Epps, who is African-American, says she was able to find a loan for her home, but has a number of friends who had to go from lender to lender to find someone to offer a loan.
"I do know people that I don't even believe the got a (good loan). Then they got the house and now they don't have it because they put them in a house they could not afford," Epps said.
The foreclosure crisis in Mississippi does appear to be slow receding....The total number of foreclosure actions fell 22% from the first quarter of this year and is down nearly 20% compared to the second quarter last year.
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