September 27, 2016
Bookmark and Share

DOJ Lending Case Highlights Abuses

 WASHINGTON  -- The Department of Justice's $2 million settlement this week with PrimeLending spotlights serious problems on loans insured by the Federal Housing Administration (FHA). The case found inconsistent and abusive pricing on loans to African-American borrowers, revealing that it's far too easy for lenders making government-backed loans to overcharge home buyers. 

The FHA insures mortgages that meet specific risk criteria, but the rules on how much lenders can charge remain loose. The result is that equally qualified borrowers have been charged significantly different interest rates.  

"Too many lenders making FHA-backed mortgages are doing Wild West lending," said Evan Fuguet, Senior Policy Counsel for CRL.  "The FHA was created to make mortgages accessible, affordable and sustainable. Without clear rules to prevent overcharging, abuses are inevitable. That undercuts the reason the program was created in the first place."

Many of the bad lending practices that precipitated the subprime crisis have been addressed, but there's more to be done. The FHA should adopt the following policies:

  • Immediately apply pending Federal Reserve rules that, come April, will ban kickbacks and other incentives to overcharge for mortgages. 
  • Establish reasonable limits on loan costs to prevent inconsistent and abusive pricing.  
  • Maintain a strong focus on access to fair and affordable credit for all families regardless of race.
  • Continue to strengthen efforts to enforce FHA rules.  

About the Center for Responsible Lending

The Center for Responsible Lending is a nonprofit, nonpartisan research and policy organization dedicated to protecting homeownership and family wealth by working to eliminate abusive financial practices. CRL is affiliated with Self-Help, one of the nation's largest community development financial institutions.


STORY TAGS: BLACK, AFRICAN AMERICAN, MINORITY, CIVIL RIGHTS, DISCRIMINATION, RACISM, , RACIAL EQUALITY, BIAS, EQUALITY, culture



Back to top
| Back to home page
Video

White House Live Stream
LIVE VIDEO EVERY SATURDAY
alsharpton Rev. Al Sharpton
9 to 11 am EST
jjackson Rev. Jesse Jackson
10 to noon CST


Video

LIVE BROADCASTS
Sounds Make the News ®
WAOK-Urban
Atlanta - WAOK-Urban
KPFA-Progressive
Berkley / San Francisco - KPFA-Progressive
WVON-Urban
Chicago - WVON-Urban
KJLH - Urban
Los Angeles - KJLH - Urban
WKDM-Mandarin Chinese
New York - WKDM-Mandarin Chinese
WADO-Spanish
New York - WADO-Spanish
WBAI - Progressive
New York - WBAI - Progressive
WOL-Urban
Washington - WOL-Urban

Listen to United Natiosns News