Thursday, December 02, 2010

"Racist" lenders: Our collective memory gets even shorter 

Could our collective memory get any shorter? Because I could swear I've seen this movie before.

Apparently requiring credit scores slightly above the legal minimum is both "racist" and potentially offensive to federal law.

Banks will be accused of employing discriminatory credit standards when making mortgages in a series of fair housing complaints that a national consumer coalition plans to file beginning next week.

The National Community Reinvestment Coalition plans to challenge the widespread practice of requiring borrowers asking for FHA-backed loans to have higher FICO scores than the minimum required by the FHA, according to a report from Ken Harney at New Times...

The NCRC says that the higher FICO requirements disproportionately discriminate against African-American and Latino borrowers, many of whom have credit scores above the 580 threshold set by FHA but below the higher minimums set by banks.

It argues that because the FHA insures the loans, there is "no legitimate business justification" for rejecting applicants on the basis of FICO scores that are acceptable to FHA.

Not surprisingly, this new Alinskyesque agitation is the result -- we are no doubt shocked to learn -- of new regulation:
The irony is that until October, the FHA did not set a minimum FICO score. The FICO requirement was put in place in an attempt to reduce the risk the FHA was taking on as it has greatly expanded its balance sheet to fill the gap created in lending to risky borrowers by the collapse of the subprime mortgage market.

Now what was intended to be a floor that applied only to a government program is being flipped over and turned into a ceiling for private lenders. If things go as planned by the NCRC, banks will be forced to make loans to risky borrowers to avoid charges of discrimination.

Remember this the next time somebody argues that the government does not promote risky lending practices.


By Anonymous Old Fan, at Thu Dec 02, 09:44:00 PM:

"If things go as planned by the NCRC, banks will be forced to make loans to risky borrowers to avoid charges of discrimination."

OH my...

The insanity continues.

Today in the HOUSE, led by Nancy, the insanity was on full display as well. That sham was simply nutty. Besides, these are coming Tax Increases, not tax cuts. Extending the rate as it is, is not voting for a tax cut - it is voting to stop a TAX INCREASE.

It really is all really concerning. But what can one expect, when the Democrats decided to keep Nancy, and we blew the chance to remove Reid.

Even the Democratic Partisans applause for Rangel made me think many are in need of some sincere professional help.  

By Anonymous Anonymous, at Thu Dec 02, 10:13:00 PM:

Socialism baby. All the banks have received billions, neh trillions in free money from the Fed. The giv'ment, understandably, thinks they should have some influence over the lending of that money. America: love it, or move to some little valley in far remote Colorado.  

By Blogger TOF, at Fri Dec 03, 08:46:00 AM:

Hey, Anymouse. Where will the billions/trillions come from? Obama's stash?  

By Anonymous Ignoramus, at Fri Dec 03, 09:06:00 AM:

This is just the initial agitation -- an activist group saying that it's going to sue.
The real action happens when the new federal Consumer Finance Protection Bureau adopts anti-discrimination rules that will result in de facto race and gender-based quotas for credit. The Civil Rights Act wasn't supposed to impose quotas on hiring either, but it did.  

By Anonymous Anonymous, at Fri Dec 03, 10:54:00 AM:

Hey TOF: Reading is fundamental

"Foreign banks were among the biggest beneficiaries of the $3,300bn in emergency credit provided by the Federal Reserve during the crisis, according to new data on the extraordinary efforts of the US authorities to save the global financial system"  

By Blogger Assistant Village Idiot, at Sun Dec 05, 10:43:00 PM:

Yeah, Anon, reading is fundamental. TOF asked where the money came from, not where it's going.  

By Anonymous Anonymous, at Tue Dec 07, 01:07:00 PM:

In fact, AVI, the very sentence I quoted in my earlier comment answers TOF's mocking question "Where will the billions/trillions come from", in that it says (when, ahem, one actually reads it), "$3,300bn in emergency credit provided by the Federal Reserve during the crisis".

In my response to TOF I bolded the reference to the $3.3 Trillion number, since from his comment it appeared his greatest confusion seemed to be about the size of the government effort. For you, though, I am bolding the words "Federal Reserve", since that is apparently where you fell off the word train today.

Are we done here? I do hope so.  

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