"This problem is not going to stop because there are people who are greedy out there, and the best people to take advantage of? The needy," said Sue Berkowitz, the executive director of Appleseed Justice Center, a nonprofit organization that represents low-income residents.
Acknowledging that some homeowners were deceived into agreeing to high-interest mortgages, the Federal Reserve this week proposed new rules that would require mortgage lenders to show that would-be homeowners could afford the mortgages and would require the disclosure of hidden fees, among other restrictions.
"When someone goes to a mortgage broker, the last thing you think is that that mortgage broker is going to put you into a bad loan," Ms. Berkowitz said.
But while she applauds the new restrictions, she said they do too little to help those already deceived by mortgage companies.
Ms. Berkowitz stood with the South Carolina chapter of the National Association for the Advancement of Colored People on Wednesday in support of a federal lawsuit that has been filed in California by the NAACP. In the suit, the NAACP says a dozen mortgage lenders have discriminated against African-American homeowners who were steered into high-interest mortgages when, often times, they should have qualified for a better loan.
Asked whether the mortgage-lending problems are a racial or class issue, South Carolina NAACP President Lonnie Randolph said he couldn't differentiate between the two.
"Race is a factor in everything," Mr. Randolph said. "Race is a part of life, just like food, water and air is."
"As much as we want to say that great progress has been made (regarding racism), we're still trickling along," he said.
He said the lawsuit has several goals, including:
- An injunction to stop racially discriminatory lending practices
- Racial-understanding training for mortgage lenders
- Creation of third-party oversight of lenders
- Return of excessive payments to homeowners.
Ms. Berkowitz said she also intends to work with the Legislature this session to strengthen some of the bills that have been proposed to address predatory lending practices.