For New Pittsburgh Courier
(NNPA)—As news reports continue to update foreclosure trends across the country, another looming development has the potential to change the mortgage industry in significant and permanent ways. A lawsuit filed in federal court Dec. 31 by the city of Memphis and Shelby County in Tennessee became the latest legal challenge to how mortgage loans are offered in communities of color. Alleging “unlawful, irresponsible, unfair, deceptive and discriminatory mortgage lending in Memphis and Shelby County,” the lawsuit points an accusatory finger at one of the nation’s largest banks, Wells Fargo.
The two governmental jurisdictions have each agreed to provide $125,000 to bear the cost of the litigation and potential expert witnesses. Representing the plaintiffs will be the DC-based law firm of Relman & Dane, the same firm hired by the city of Baltimore in its suit against Wells Fargo.
Reportedly, Wells Fargo originated approximately 25 percent of all foreclosures filed in Shelby County in 2009. Additionally, one of every eight Wells Fargo mortgage loans made to Black homeowners in Shelby County resulted in foreclosure. By comparison, only one in 59 mortgage loans resulted for White homeowners in the same locale. Shelby County foreclosures also account for 40 percent of all foreclosures in Tennessee.
As in the case of Baltimore, officials contend that many of the Black homeowners qualified for prime rate loans that would have been more affordable and sustainable. Although on Jan. 5 U.S. District Court Judge J. Frederick Motz dismissed the Baltimore case as too broad, the court left open the opportunity for the case to be re-filed with a more narrow scope that addressed the specific harm caused by the failed mortgages. Baltimore originally alleged in January 2008 that the lender was responsible for much of the city’s economic decline.
According to a recent interview, John Relman, one of the lawyers representing the city and county said, “Wells knew how to write and get people into low-cost loans. You just don’t see much of that in the Black community.”
Reverse redlining is the term used to identify the marketing of high cost loans to Black customers. This kind of lending was also the charge waged by Illinois by Attorney General Lisa Madigan, whose office alleged this same practice has been occurring in Latino communities as well.
For both city and county governments in Tennessee, the loss of substantial property tax revenues drained from foreclosed homes and their neighbors will soon translate into the delivery of fewer vital services. In Memphis, 70 percent of its civil city revenues are derived from property taxes; for Shelby County, property taxes account for 40 percent of its budget.
As the judicial process unfolds, local governmental officials will face a resulting and serious dilemma, that of fiscal solvency. It is unrealistic in the face of continued, long-term unemployment on one hand, and mounting foreclosures on the other, that local governments anywhere will be able to deliver all of the range of services that citizens expect and reply upon. Baltimore and Memphis will not be the only areas to face this critical issue. The same will be true for every city or county where large numbers of foreclosures threaten the vitality and livability quotient of communities.
Perhaps it is time for more in our community to work in concert, forging challenges to the practices that devastate the places we call home. The National Black Caucus of Local Elected Officials, the National Conference of Black Mayors, the National Black Caucus of State Legislators — are all organizations whose members have been entrusted with leadership roles. Perhaps in 2010 these recent developments will encourage more officials in leadership posts to actively join efforts to measurably benefit communities of color everywhere.
As state legislators return to respective capitols, now would be the time to urge their personal support of mortgage reforms. Local advocates in several areas are expected to push for state reforms.
As a people, we fought and won the battle for civil rights. But we have yet to know or enjoy the benefits of economic justice. Social equity is one thing, economic parity is quite another. People of color need both.
In 2010, will we claim economic justice for all?
Digital Daily Signup
Sign up now for the New Pittsburgh Courier Digital Daily newsletter!
- Cheerios ad with multiracial family prompts racist outcry (8)
- This Week In Black History (1)
- That intelligence agencies monitor our calls and Internet usage shouldn’t come as a surprise (1)
- Central Baptist Church hosts 'Spring Hat Sensation' at LeMont (2)
- Pitt hosts national summit tackling poverty research cuts (2)