Lawsuit Alleging Racial Bias at Countryside Financial
If this is true, there could be a lot of people affected: an article on Reuters reports that a lawsuit has been launched against Countryside Financial Corp., alleging racial bias in how the company writes mortgage loans. The lawsuit accuses Countryside of marking up interest rates or tacking on fees after agreeing to lend based on objective criteria such as credit histories or home values. In other words, once Countryside sees who the borrower is, the rules change. The legal action is seeking to be certified as a class action.
Given that Countryside makes 1 out of every 6 home loans in the US, the potential for a large class action suit is significant.
This is not the only legal action accusing Countryside of racial bias. Just two days earlier, the NAACP accused Countrywide (as well as 13 other lenders) of steering blacks into higher-cost "subprime" loans, while offering white borrowers better terms.
This isn't the only incidence of bias in the lending industry. In fact, I blogged earlier this year on the fact that some borrowers have been paying subprime when they didn't need to. It's also been shown that women may not get the same treatment as men when shopping for mortgage loans. Whether lenders like it or not, their agents are still human and subject to some bias. That bias can show up in patterns in lending practices.
Time for lenders to either monitor their own business better, or for the government to step in and do it for them.