The NAACP this week filed a class action suit accusing Wells Fargo and HSBC of charging unfairly high interest rates to African American homeowners with high incomes and high credit scores. The banks were quick to slap down the charges as “totally unfounded and reckless,” even in the face of convincing evidence from the NAACP.
The lawsuit cites several studies that document discrimination, including a 2006 report by the Center for Responsible Lending that found black people were 31 percent to 34 percent more likely to receive higher-rate subprime loans. The suit claims the banks violated the Fair Housing Act, the Equal Credit Opportunity Act and the Civil Rights Act.
“Generations of African Americans have been deprived of the opportunity to participate in the American dream by banks that refused to give them mortgage loans simply because of the color of their skin or placed them in unfavorable loans that decimate them financially,” the suit states. “It is beyond dispute that the African American community has long been the victim of discriminatory banking practices.”
Jealous said subprime mortgages, intended for people with poor credit, were given to African-Americans who qualified for better loans 54 percent of the time compared with 23 percent for white people.
The class includes any African American who received a subprime loan even though they qualified for a standard loan. The NAACP was set to name a third bank in the suit but the still-unnamed bank escaped the outing by settling before the suit was filed.