A Texas woman recently filed suit in federal court against Alpha Mortgage USA, Inc., and American Home Mortgage Servicing, Inc., alleging she was targeted for a loan with onerous terms because she is African-American. Nanette Lewis refinanced her mortgage with Alpha Mortgage USA, the original lender, to get peace of mind. Instead, Ms. Lewis said that she received a bait-and-switch predatory loan accompanied with heartbreak.

Ms. Lewis’ suit mirrors another suit filed by the City of Baltimore, and another by the Attorney General of Massachusetts. All three of the suits accuse the lenders of reverse-redlining, which is the act of targeting minority loan applicants for the worst possible mortgage deals. Instead of the loan she was promised, the mortgage was for more than $175,000 on a home valued around $156,000. Additionally, included was more than 10%, or $17,654, in points and fees. When asked about the last-minute changes, loan officers told Ms. Lewis that they would just refinance her loan again in a few years and that she would be fine.

After Ms. Lewis was laid off from her job, she started to fear that she might miss a mortgage payment. As a result, Ms Lewis went to see a lawyer with Lone Star Legal Aid to see how she could keep her home safe. It was the lawyer at Lone Star Legal Aid who discovered that the terms of her mortgage violated the federal Home Ownership and Equity Protection Act, which bars lenders from excessive points and fees as well as from certain changes in loan terms at closing. Ms. Lewis says she would have had no idea that her loan was questionable had she not seen a lawyer. It’s believed that this is the first lawsuit of its kind in Texas. I included this story because I fear it’s typical of how the sub-prime lenders have been operating in their dealings with low-income citizens.

Source: Houston Chronicle

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