IMMEDIATE RELEASE March 13, 2009
Contact: Leila McDowell
(202) 463-2940 x1005
NAACP FILES LANDMARK LAWSUIT TODAY AGAINST
WELLS FARGO AND HSBC
Remedies would benefit millions of potential borrowers
Today, the NAACP filed separate lawsuits in U.S. District Court in California against two of the country’s largest lenders, Wells Fargo, and HSBC. These lawsuits allege systematic, institutionalized racism in sub-prime home mortgage lending. The remedies being asked for in the lawsuit include measures for increased accountability and transparency.
According to the lawsuits, African American homeowners who received sub-prime mortgage loans from these lenders were more than 30 percent more likely to be issued a higher rate loan than Caucasian borrowers with the same qualifications. Other studies cited in the lawsuits demonstrate that disparities are pervasive. In fact, upper income African Americans are more than twice as likely to receive higher cost loans as their lower income white counterparts. The National Community Reinvestment Coalition’s most recent study finds that discrimination against minorities persists in mortgage lending. The Federal Reserve Board, U.S. Department of Housing and Urban Development and the FDIC have all made similar observations.
“It is time for these lenders to be held accountable,” said NAACP President Benjamin Todd Jealous, “We look forward to forcing real change and real relief through this lawsuit.”
“These banks are getting billions in bailout money yet think that they can get away with business as usual,” said Austin Tighe, co-lead counsel for the NAACP. “Predatory lending policies and practices are legally actionable, morally reprehensible, and fiscally irresponsible.”
These two new lawsuits raise the same claims as pending litigation by the NAACP against other mortgage industry leaders. Lenders named in this pending litigation include Accredited Home Lenders, Inc., Ameriquest Mortgage Co., Bear Sterns Residential Mortgage Corp. d/b/a Encore Credit, Chase Bank USA, Citimortgage, First Franklin Financial Corp., First Tennessee Bank d/b/a First Horizon National Corp., Fremont Investment & Loan, GMAC Mortgage Group, LLC, GMAC ResCap, Long Beach Mortgage and SunTrust Mortgage.
“Lenders named in the suits, on average, made high cost sub-prime loans to higher qualified African Americans 54 percent of the time, compared to 23 percent of the time for Caucasians,” said NAACP Interim General Counsel Angela Ciccolo. “Our lawsuit aims to change the policies and practices which lead to those results.”
Earlier this year a federal court denied a joint motion filed by those defendants seeking to dismiss the lawsuit. The court denied that motion, finding that the NAACP had standing to bring the lawsuit, and that it had adequately stated its claims for the lawsuit to proceed. The lenders will now be required to turn over information and documents regarding their mortgage policies and practices.
One lender has already entered into a preliminary settlement agreement with the NAACP, and a number of other lenders are engaged in similar discussions. Those settlement discussions are being mediated by the Honorable John K. Trotter, a former Justice on the California Court of Appeals.
Representing the NAACP is its Interim General Counsel Angela Ciccolo in Baltimore, Maryland; Brian Kabateck and Richard Kellner of Kabateck Brown Kellner in Los Angeles, California; Austin Tighe of Feazell & Tighe, L.L.P. Gary Bledsoe of Law Offices of Gary Bledsoe & Associates, both in Austin, Texas and Daniel Covich of Webb, Cason and Covich in Corpus Christi, Texas.
Founded in 1909, the NAACP--the nation's oldest, largest and most widely-recognized grassroots–based civil rights organization—is celebrating its 100th anniversary this year. Its more than half-million members and supporters throughout the United States and the world are the premier advocates for civil rights in their communities, conducting voter mobilization and monitoring equal opportunity in the public and private sectors.