Monday, March 17, 2008

Subprime Lawsuits by Cleveland and Baltimore

I've been thinking about the nuisance lawsuit that Cleveland filed against a series of subprime lenders and the Baltimore lawsuit filed about Wells Fargo, based on the Fair Housing Act.  Wall Street Journal Blog talks about them here, as have a bunch of other bloggers.

Both complaints are heavy on narratives about how subprime lending works.  The Baltimore complaint hypothesizes Wells Fargo targeted African American borrowers for subprime loans (what some call "reverse redlining"), with exorbitant origination fees and unrealistic promises of refinancing on favorable terms later.  The complaint has a series of maps, detailing residential segregation and foreclosure.  The results are pretty stark, but we're still a ways from showing that the disproportionate impact is the result of discrimination.  I'm most interested in seeing how this plays out.

Alfred Brophy

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