Three Georgia counties suing financial institutions for violating FHA

http://www.bizjournals.com/atlanta/news/2015/11/24/three-georgia-counties-suing-financial.html

Phil W. Hudson Staff Writer Atlanta Business Chronicle
Nov. 24, 2015

Cobb, DeKalb and Fulton counties filed a lawsuit against Bank of America Corp. (NYSE: BAC), Bank of America N.A., Countrywide Financial Corp., Countywide Bank, FSB, and Merrill Lynch & Co “seeking damages and injunctive relief” for violating the federal Fair Housing Act.

According to the law firm representing the counties Harris Penn Lowry LLP, the lawsuit alleges the defendants violated the FHA by engaging in a discriminatory housing practice known as "equity stripping."

“There were two key, interrelated, components to the scheme: a predatory and discriminatory mortgage loan-making component and a loan servicing/foreclosure component,” Harris Penn Lowry reported.

According to the complaint, beginning in the early to mid-2000s the institutions targeted African-American and Latino borrowers for, or steered them into, higher cost, non-prime mortgage loans. At the time, the banks knew many of the loans were likely to fail or were not in the borrowers' best interests, the suit alleges. They either originated such loans directly or assisted other brokers and affiliates – including Accredited Home Lenders, AmeriQuest Mortgage Company, First Franklin Financial Corp., New Century Mortgage Corp., Option One Mortgage Corp., and Ownit Mortgage Solutions -- to originate them.

The loans were intended to generate higher profits and mortgage servicing income for the banks, including through higher loan interest rates, increased mortgage servicing charges over the life of the loan, loan pre-payment penalties, expensive added fees, and increased default interest rates and fees charged to late-paying or defaulting borrowers, Harris Penn Lowry claims.