Countrywide Home Loans was racist and automatically put African-Americans into exotic and expensive sub-prime loans they didn’t want or need, and couldn’t afford, according to a former employee. This employee worked there for two years up until the sub-prime meltdown. They write:
“…a customer would be qualified for a loan because their credit score and other factors based on the written product description, however, when I went in to put their (this only happened to African-Americans) – they were not qualified for the loan product and had to be referred to Countrywide’s subprime mortgage company Full Spectrum. Full Spectrum offered higher rates and fees. I got wise one day and started not inputing the race so the computer could give me “approval.”
Most of my troubles with Countrywide began when I was told I needed put customers in more exotic products such as the “No Income-No Ratio (NINA),” “Stated Income-Stated Assets (SISA),” any ARM product or the classic “Pay Option ARM” (where you have a choice of 4 payments). Countrywide offered incentives for putting customers in those types of products. My customers needed stability on their loan and didn’t need to refinance every two to three years stripping them of their equity (provided they had any). I didn’t agree with their policies so my tenure was short-lived.
Heinous. Just simply heinous. And these are the guys Kenneth Lewis is so eager to wed Bank of America to?
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@LadyCarolineLamb: “Go get your free education (which is paid for by rampant reverse racism ‘scholarships’)…” Maybe that’s what Tracy Ham and Eggs saw. It doesn’t take any “reading into” to recognize that as a provocative statement. Please explain a way to interpret “rampant reverse racism ‘scholarships’” as being race-neutral.
I can’t even stand looking at this guy’s picture. Hopefully he never gets a job anywhere else and goes home and has to file a bankrupcy and live on the streets himself.
THANK you HRHKingFriday, EXACTLY my point. Politically correct I am not, but neither am I rascist, Tracy chose to ignore my equal comments about the Nascar loving Paris-Hilton aspiring types because that is how it works with people like that.
I recently went back to college, only to see groups of people given full scholarships (NOT for scholarship BTW) who skipped almost all classes, then show up on the last day and wonder why they weren’t getting an A…kid you not. It was rampant, and each semester in rotated a new group pouring $$$ down the toilet that could have actually improved their lives. NOT working their way through like everyone else. Then you have the sleazy Paris Hilton wannabees using financial aid vouchers to buy cropped tees in the bookstore, along with their free books…then bragging in class about the $700 purse they just bought.
I get your larger message, LadyCaroline, even though your delivery is bordering on the antagonstic. But I the “reverse racism scholarships” thing kind of casts a pall over anything you might have been trying to say. It’s kind of messed up.
Um, NEQUAM. The many many named BLACK “scholar”ships are what are rascist, so redirect your temper. It is time that SCHOLARships got back to being for SCHOLARS of all races.
(meaning people who actually WANT to learn and better their situations)
…so they don’t end up in loan situations like this (to bring it back to the POINT and TOPIC)
Ah, come one guys! Didn’t you learn anything from Ave Q?
Everyone’s a little bit racist
Just to chime in on the “yes, they ask your race” question. I refinanced a mortgage late last week and filled out the final application yesterday.
Both during the phone application process and on the actual paperwork there are specific questions asking your race. In both cases (phone and paper) it is made *very clear* that providing the data is optional and that it is used by the gov to gather statistical data on lending practices.
So it’s not suprising that “race” is a box on some loan processing screen.
The interesting thing about this (so far unsubstantiated) claim is that different loan terms were offered depending on the value reported in the race field. That would be a *major* story if true and is certainly incredibly illegal.
The real story we need to be looking into is if the claim about internal systems reporting different loan terms based on race is true. Hopefully we’ll hear more about this from internal people or another whistleblower.
@LadyCarolineLamb: Nice use of the quotes around scholar; you’ve left no question as to your attitudes toward blacks. What on earth are you talking about? Give an example.
@LadyCarolineLamb: I agree wholeheartedly. I’m tired of seeing a Corolla with chrome 20′s on it (almost once a day). A lot of people in today’s age have their priorities completely screwed up, and think society owes them. A lot of these people are white, and a lot of these people are black. I think it is their mindset that makes the difference, and unfortunately for blacks or african-americans, its the “ghetto” culture that spawns this miscreants the most.
@LadyCarolineLamb: Um, you are the one that brought up scholarships and took this off topic. How generous of you to bring us back.
Man I can’t spell today. these miscreants, not this miscreants.
@LadyCarolineLamb:
Rampant is a bit of an over-exaggeration. According to a national study by the General Accounting Office, only 0.25 percent (that’s one quarter of one percent for the math challenged) of all undergrad scholarship dollars come from awards that are restricted to persons of color alone.
Seems quite the opposite of rampant…and from what I understand, these are usually privately funded — so you aren’t even paying for it. Seems like fair compensation for having to live in a world of racist morons.
@LadyCarolineLamb: Why do you focus on the “BLACK ‘scholar’ships”? Don’t minorities of all colors/genders have scholarship opportunities? And the option to squander those opportunities as well? By your reasoning, shouldn’t we just stop offering this so-called free education (which is paid for by rampant reverse CLASSism ‘scholarships’) altogether?
On topic, I agree with Tracy Ham and Eggs that the “white customers were more likely to be second or third generation owners, and thus had a better reference base to negotiate.” At least on the minority side, many new minority homeowners are first generation homeowners.
And although you and I may know where to find the tools to help you better negotiate a deal, many 1st-Gen. minority homeowners do not. They can easily find tools to get you into a home (especially with all of the predatory practices in the industry). But they may not know where to turn for expert advice (again, it’s difficult with all of the predatory practices).
Also, College Education alone does not help the BLACK “scholar” avoid the Lender who holds attitudes similar to yours and steers the 1st-Gen-er into a BAD LOAN (which is indistinguishable from a GOOD LOAN to the novice).
@LadyCarolineLamb: I think you’ve made your point, and I personally like having provocative, non-PC aspects to a discussion. I think now maybe you should chill for a while and stop posting to this thread.
@Chris Walters: You think so, huh? SO the “provacative non-pc posts” that you like so much, should be censored, while the extreme liberal posts twisting those words keep going? Piss off
@bohemian: you obviously are only looking at one side of the coin, All these poor me I was taken advantage of borrowers that are in default and foreclosure didnt take the time to act like an adult, actaully read the loan docs and make sure they understood the loan they were signing.
They didnt budget their money, they bought a home no money down 100% financing they didn’t plan and look at the future when the loan reset to see, “Can I make those payments” they based their decisions on the ability to refi in two years and on increasing home prices.
Does this sound like gambling to you?
Oh and the excuse, “Oh but I didn’t understand the loan docs so its not my fault that they are not written in a language I can understand”
Hello these are legal documents, not a childrens book.
If you cant understand the loan docs Hire an attny to go over them with you.
Then comes the well I cant afford an attorney. WHAT? So then why are you buying a home.
Sorry man but the majority of the fault lies on the people that bought outside their means, that used their House as an ATM to get all those cool toys, vacations and home improvements.
What Countrywide did wrong was jump on the subprime band wagon in order to keep ahead of everyone else.
Making loans available to people that treated home buying like going thru the drive thru for a burger.
Its called personal financial reasonability and people lack that.
Face the music, if these people were denied the home loan you better believe they would have cried foul till the govt stepped in.
I get really pissed at people that blame all the mortgage companies and conveniently forget about the greed of the borrowers. In the end the buck stops at the borrowers signature. That is unless outright fraud is involved and that is a jail time offense.
@LadyCarolineLamb: No, it was more an attempt to avoid swinging the ban hammer. But since you’re so riled up, never mind on the negotiating.
@nequam:
I think the point she was trying to make is that scholarships are often not based on academic achievement. That was the reason she put quotation marks around the word “scholar”.
@Coder4Life: thats never going to happen Mr Angelo has made millions upon millions after all he founded Countrywide
Precisely, CLAYS.
@Amiga: Innocent until proven guilty. With a accusation like this, there needs to be FAR more evidence. Maybe you need to stop thinking everyone in the world is out to screw you.
Great post, Shadow. Did you see that “Debt Diet” couple Phil and his crazy wife Felic who had 6 kids…none of them had medical/dental coverage, and they were in hundreds and thousands of dollars in debt so she could get manicures, faux tans, and clothes that even Paris would be embarrassed to wear (Felice is pushing 40, BTW). The list extends FAR from those things too…birthday parties where she had special snow shipped in…just nuts. …And she was a former MORTGAGE BROKER. Argh
[www2.oprah.com]
@LINIS:
Agreed. The problem we have here is that a single accusation by whomever, without any real evidence, can result in a virtual tar and feathering of a company. We don’t know who this former employee is, or if he actually was an employee. Maybe he works for a competitor of Countrywide. Maybe he’s some sort of troll.
just as an aside, i’m white as the cliffs of dover. i still ALWAYS check OTHER when filling out questionnaires. the way i see it, my ethnicity doesn’t define me. others choose to be defined by this & that’s fine too. but why the hell does the government/prospective employer/lender need to know what color you are?
If I were designing a system to adjust creditworthiness on the basis of race, if the input operator were to leave it blank, I’d probably select the worst possible tier for the calculations. Magically approved loans with leaving the race field blank is probably the same kind of coincidence that explains all the “funky” things happening during a full moon.
This post has nothing to do with scholarships, and neither should the discussion.
@LadyCarolineLamb: its really sad that society went from work hard and save up to get it now deal with it later.
Its scary how people dig their own holes and cover themselves up. And we are talking about secured debt not unsecured Credit card debt.
And people roll unsecured into their homes.
I just dont understand it, people are willingly committing financial suicide and then they have the balls to accuse the mortgage companies of predatorial lending.
I do feel for some of these people but the fact is they acted irresponsibly.
People need to realize mortgage companies are there to make money, it their business. Its not their responsibility to budget your finances.
Where they are at fault is lax underwriting. Some loan products are just plain stupid and are not being used as they were intended to be used but that still doesn’t excuse the borrower.
If you steal a candy bar from a store you cant tell the cops well they made the candy bar available so its partially their fault.
Its just sad.
@mac-phisto: Actually, the folks at FNMA explained it to me that the government uses the information to prevent discrimination. By being able to track the rates and fees to individual racial/gender groups they can see if one group is being treated differently when the rest of the equation is equal.
What is up with that dude’s face? He looks like a spoiled orange in a wig.
The MAN has spoken…roflmao.
Thou shalt not deviate from what we want you to hear…
@shadow735:
I think some people operate under the assumption that if a lender approves a loan or mortgage, that they can afford it and it is in their best interests. Or if a credit card company extends them a certain credit limit, they should go ahead and use it all. It comes down to personal irresponsibility with finances.
@forever_knight: That quote doesn’t say anything about ARMs or minorities making stupid decisions, it says they received subprime mortgages, i.e. higher interest rates. They weren’t given a choice of a lower rate when they should have been.
I”M PRETTY SKEPTICAL on this. I worked for a lender that sold loans to Countrywide and we had to run all our loans through their system for an approval (except FNMA or Freddie as that was optional) before we sold the loans to them. I never saw any type of disparity regarding this. Yes there was an area to mark off sex, ethincity and race but that is for HMDA reporting (also found on teh loan app/1003).
In fact I always found Countrywide’s system (Clout for us) to be the easiest system to get an approval in vs Fannie Mae’s Desktop underwriter or Freddie Mac’s Loan Prospector since it graded self employment, credit profile and number of units (2-4) for the property the easiest. In my opinion that’s probably why they have the default rates that they do is because their system graded applicants to easily vs the other systems out there.
Funny Consumerists starts a racially charged thread…even titles it accordingly, and they are appalled when the responses show critiques of conumers of both races that have poor spending habits? A little backward I should say…or maybe it is to just appease the word twisters that want to scream “racism” where it ISN’T there. YOU started the racially charged subject, Consumerist…why don’t you “ban” THAT?
@LadyCarolineLamb: Did you forget to take your medication again?
Shadow, this post has nothing to do with medication, and neither should the discussion.
Got any?
@mac-phisto: I do that too! Although sometimes I wonder what its doing to the ratio/formula that companies use to ensure they aren’t being discriminatory.
@LadyCarolineLamb:
I Don’t understand how you can make these comments and then suggest that there could not be any racism going on with the Countrywide issue above. Seriously?
And I’m sure Countrywide was not doing it with the intention of “hating on the black man”, but was merely taking advantage of a stereotype. Black people are more likely to get the crappy end of the credit stick. Ask one some day, randomly, and I’ll bet you money that they have had problems with getting credit.
Because companies can get away with it, because people who have never dealt with it can’t believe that it happens in this day and age.
It does. Get over it and move on. You’re stopping progress when you question the “victim” and don’t focus on the “crime”. Like the police badgering a woman in a skimpy skirt after she’s been raped.
The law that requires the race field on the form is called the Home Mortgage Disclosure Act. Get your facts straight before you accuse someone of making stuff up.
@tmccartney said:Get your facts straight before you accuse s…
Unfortunately, that would require some of our resident experts to actually look something up. It appears treating one’s opinion as fact is far more easy and satisfying.
@Tracy Ham and Eggs:
Not true about Full Spectrum. Countrywide loan officers get paid when a Full Spectrum loan goes through.
I can’t say it any better than this, so I’ll just quote it:
I went to get a loan and they asked my race
I wrote down human inside the space
It’s a disgrace how they try to debase
It ain’t the bank’s damn business how my lineage trace
-Beastie Boys
(although I do understand that the federal regulations need race to verify that racist policies are not in place)
@tmccartney: Then thats changed in the last couple years. Sorry for my mistake.
They’ve done studies in the past couple of years showing that lenders have consistently steered minorities into subprime loans despite their qualifications. A white person and a black person presenting the same income bracket, the same down payment, and the same approximate credit rating will get different loans.
So can we avoid turning this into “let’s slag on the black borrowers for having crap financial skills”? Because that’s not actually what’s going on here.
Center for Responsible Lending study
@Tracy Ham and Eggs as played by Walter Mondale: that’s nice. as soon as they have a category for “american” i’ll be able to participate in their little study. until then, i guess i’m just “other”.
Yet another mortgage article that misses the point…NO WAY this is true.
The truth is Countrywide did not in any way, shape or form discriminate against any customers, for any reason.
They tried to fuck everyone equally.
@CumaeanSibyl: Well, again, everyone was steered toward “subprime” products (which does not mean bad products, just a certain type). The mosre educated or experience the borrower the less likely they were to take this product. Three years ago people who took 80% fixed rate products were considered old fashioned.
Another factor is that white customers are far more likely to shop around when looking for a mortgage rate (yet another result of having better historical resources.)
Let me give you an example here, and this is capitalism at work.
Two customers. One white, one black. 680 credit scores, 10% down, $300k mortgage. The broker offers both the same 6.5% mortgage. Both customers qualify for 6%, but that .5% extra pays the broker 3k. The white customer opts to shop around. He finds that the broker across the street is willing to make less on the deal and give 6% to steal the business.
Now the white customer is paying the rate he “qualifies” for while the black customer is being “steered” into a higher rate. In reality this is just how the business world works, you have to work to save money.
You want to fix the mortage industry? Force EVERYONE buying or refinancing a home to take a multi-part financial management program run by an independent organizations (Temples/Churches/Mosque tend to offer them).
Or require everyone to shop at at least two different brokers/lenders before closing. Of course you can’t force, but then you wonder why do few actually do it and turn around and complain that they were steered.