SOURCE: Kabateck Brown Kellner; NAACP
December 18, 2007 17:32 ET
NAACP: Bailout Mortgage Plan Is Too Little Too Late for the Majority of African American Borrowers; Amended NAACP Class Action Filed Today Naming Additional Lenders
LOS ANGELES, CA--(Marketwire - December 18, 2007) - The National Association for the
Advancement of Colored People (NAACP), which filed a class action lawsuit
in July against a dozen major subprime lenders alleging institutionalized
racism in lending practices, says President George Bush's plan to freeze
introductory mortgage rates for five years won't help the majority of
African Americans who have already been victimized by discriminatory
lending practices. Seven additional lenders were added to the lawsuit today
(National Association for the Advancement of Colored People, et al vs.
Ameriquest Mortgage Company, A Corporation, et al. July 11, 2007, amended
Dec. 18, 2007, Los Angeles Federal Court, Case No. SACV 07-0794).
"It's a case of too little too late," says Brian Kabateck, one of lead the
attorneys representing the NAACP and a partner with the Los Angeles law
firm of Kabateck Brown Kellner, LLP. "African Americans are at least 30%
more likely to be placed into subprime loans and the President's so-called
solution does nothing to help people who have been late on just one
payment. For those hurt the most by predatory lending, the proposal is
In July 2007, a report published by Freddie Mac (Federal Home Loan Mortgage
Corporation) showed that minority borrowers pay higher annual percentage
rates on mortgage loans than non-minorities with equal income and credit
risk. For instance, in 2005, African American borrowers paid an average of
128 basis points more for loans than their white counterparts. In the
subprime market, the difference was event greater -- 275 basis points more.
In data collected under the Home Mortgage Disclosure Act, from 2004 to 2006
it was estimated that African Americans were at least 31 to 34 percent more
likely to be put into a high-cost subprime loan than similarly situated
"It is unfortunate that the government's plan does not scrutinize the
practices of lending institutions, but instead provides lenders the
opportunity to stave off government investigations into their racially
discriminatory lending practices," says Angela Ciccolo, Interim General
Counsel of the NAACP. "Although it appears the government is helping, in
reality, it is helping a select few. The proposal is mere window dressing,
allowing lenders to continue to engage in racially discriminatory practices
with little government oversight."
When the NAACP lawsuit was filed in July, it was the first suit that had
ever charged so many major mortgage lenders with racial discrimination.
"Since July, we discovered other lenders that practice discriminatory and
predatory lending," says Kabateck. "We filed an amended complaint today
that names seven more lenders as defendants."
The new defendants are Countrywide, CitiMortgage, Suntrust Mortgage, GMAC
Rescap, JP Morgan, National City and First Horizon. NAACP chapters
throughout the U.S. will be holding press conferences about the new filing
and to discuss concerns about the bailout plan.
Named in the original class action were Ameriquest Mortgage Company,
Fremont Investment & Loan, Option One Mortgage Corporation, WMC Mortgage
Corporation, Long Beach Mortgage Company, BNC Mortgage, Accredited Home
Lenders, Bear Sterns Residential Mortgage Corporation, Encore Credit, First
Franklin Financial Corporation, HSBC Finance Corporation and Washington
"When African Americans pay hundreds of dollars each month on their
mortgages because of discriminatory lending it affects everything --
retirement planning, college savings, consumer spending and quality of
life," says co-lead counsel Austin Tighe of Feazell & Tighe. "Instead of
home ownership being the cornerstone of the American dream, it becomes a
nightmare. President Bush should have proposed a real solution. Instead, he
bowed to the interests of the lenders and put a band-aid on a shotgun
wound. We look forward to forcing real change and real relief through our
Filing the amended lawsuit is the NAACP and its legal counsel NAACP Interim
General Counsel Angela Ciccolo of Baltimore, Maryland, Kabateck Brown
Kellner in Los Angeles, Austin Tighe of Feazell & Tighe in Austin, Texas,
and Gary Bledsoe and Daniel Covich of the Law Offices of Gary L. Bledsoe &
Associates in Austin, Texas.
For a copy of the complaint, contact Amalia Najarro at Kabateck Brown
Kellner: 213-217-5000, e-mail: AN@kbklawyers.com. Additional information
regarding the NAACP is available on its website: NAACP.org.