PANW editor, Abayomi Azikiwe, covering a meeting with Senator Levin's aide on his vote in favor of the Wall Street bailout on Oct. 3, 2008. (Photo: Alan Pollock).
Originally uploaded by Pan-African News Wire File Photos
December 13th, 2010
by admin Published in FHA
The Department of Housing and Urban Development is launching multiple investigations into the practices of certain mortgage lenders to determine if their home loan policies illegally deny qualified African American and Latino borrowers access to credit the agency said on Thursday.
The investigation comes after the National Community Reinvestment Coalition (NCRC) filed 22 complaints alleging that the loan activities of the mortgage originators showed that their home lending practices deny FHA- insured loans to African Americans and Latinos with credit scores as high as 640.
Federal Housing Administration (FHA) guidelines allow mortgages to borrowers with credit scores above 580, provided the borrowers have down payments equaling 3.5 percent of the loan amount, or above 500, provided the borrowers have down payments equaling 10 percent of the loan amount.
“FHA is an important vehicle for Americans who want to purchase or refinance a home. We thank NCRC for bringing these complaints to HUD. For lenders to deny responsible home seekers this source of credit, without regard for their capacity to repay the loans, would raise serious fair housing concerns and, if proven, undermine our nation’s recovery efforts,” said HUD Assistant Secretary for Fair Housing and Equal Opportunity John Trasviña. “HUD will take appropriate action against any lender found to be engaging in discriminatory practices.”
John Taylor, NCRC President said last week, “the decision by some banks to not follow the FHA’s policy is cutting qualified borrowers off from accessing credit, and in doing so, causing harm to their ability to prosper, build wealth and for our economy to grow.”
Taylor argues that because the loans are 100% guaranteed, whether the borrower’s credit score is 580 or 780, loans with lower credit scores don’t pose additional risk to the company. “A lender is only at risk if they fraudulently or improperly originated the loan, against FHA’s underwriting criteria. As is the case across the secondary market, in that situation, the lender can be forced to buy back the bad loan,” he said.
No comments:
Post a Comment