Miami, Philadelphia Sue Wells Fargo for Redlining Discriminatory Lending

The largest portion of most Americans wealth is their home. There is a huge “wealth gap” between white Americans and black. No small part of this wealth gap is due to predatory lending, and racial discrimination in loan origination. By refusing loans to black folks and other minorities in certain geographic areas, the bank assures that they can only buy less desirable, and thus less likely to rise in value properties.  So Joe the white guy gets a loan in a fast growing section of the city where property values are rising at 20% a year. Theodore, the black homeowner is limited to buying properties in older sections which are only rising in value a 1-3% a year. Joe winds up with a lot more money in 10 years – because the bank won’t loan to Theodore and defacto segregates the city.

Philadelphia sues Wells Fargo for allegedly discriminating against minority borrowers

The city of Philadelphia sued Wells Fargo on Monday for allegedly discriminating against minority home buyers.

The complaint filed in a federal court in Pennsylvania alleges that Wells Fargo violated the Fair Housing Act of 1968 by “steering” minority borrowers into mortgages that were more expensive and riskier than those offered to white borrowers, according to court documents.

The lawsuit says that Wells Fargo is among the major banks with a “history of redlining” in Philadelphia, a practice traced back to the 1930s that involves denying credit to borrowers in certain communities because of their race or ethnicity.

The complaint says that between 2004 and 2014, African American borrowers were twice as likely to receive high-cost loans when compared to white borrowers with similar credit backgrounds. Latino borrowers were 1.7 times as likely to receive costly loans when compared to white borrowers, the lawsuit claims.

“The city’s unsubstantiated accusations against Wells Fargo do not reflect how we operate in Philadelphia and all of the communities we serve,” Wells Fargo spokesman Tom Goyda said in a statement. “Wells Fargo has been a part of the Philadelphia community for more than 140 years and we will vigorously defend our record as a fair and responsible lender.”

The filing comes as the bank is still recovering from a sales scandal in which bank employees opened millions of unauthorized accounts in customers’ names. The complaint draws parallels between the alleged predatory lending and the problematic sales targets by saying there was a lack of “internal controls” that could have prevented both issues.

Many borrowers were also rejected later when they applied for credit that would have allowed them to refinance those more expensive loans, according to the complaint. As a result, minority borrowers faced higher rates of foreclosure — a pattern that also hurt the city by leading to lower property taxes and more frequent incidents of vandalism and crime, the lawsuit claims.

Monday’s lawsuit comes just two weeks after the U.S. Supreme Court ruled that cities have standing to sue banks for predatory lending practices, on the grounds that the cities can also incur financial damages, such as reduced tax revenue.

In that case Miami sued Bank of America and Wells Fargo, arguing that discriminatory lending practices led to higher rates of default for minority borrowers. Miami, which was represented by the same lawyers handling the Philadelphia case, claimed that the banks in turn caused financial harm to the city by leading to lower property taxes and requiring the city to provide services to struggling borrowers.

While the Philadelphia investigation has been underway for more than a year, the city waited until after the Supreme Court ruling to ensure that it would have legal standing to sue, said Benjamin Field, deputy city solicitor for Philadelphia, in an interview.

News of the Philadelphia lawsuit against Wells Fargo was first reported by Reuters.

 

The New Jim Crow….Auto Insurance

You start out in 1954 by saying, “Nigger, nigger, nigger.” By 1968 you can’t say “nigger”—that hurts you, backfires. So you say stuff like, uh, forced busing, states’ rights, and all that stuff, and you’re getting so abstract. Now, you’re talking about cutting taxes, and all these things you’re talking about are totally economic things and a byproduct of them is, blacks get hurt worse than whites.… “We want to cut this,” is much more abstract than even the busing thing, uh, and a hell of a lot more abstract than “Nigger, nigger.” _Republican Lee Atwater

The “Black Tax” on everything from a home mortgage to your car insurance…

For those black folks who wouldn’t get out to vote against the Chumph and his Republican henchmen last election…Start writing those checks.

All of that crap about how awful Hillary was…When the white-party really is out to kill your dumb black ass.

BlackLivesMatter is about a bit more then just police brutality. When you are targeted and ticketed at a rate 3-10 times higher than white folks…What exactly happens to your insurance rates?

Racism in America: It’s so pervasive that white people pay less for car insurance

Black people pay more than white people for car insurance, even when the risk is lower

It’s expensive to be black in America. From cradle to grave, for everything from starter home loans to burial insurance, African Americans are confronted with a paywall that demands they fork over more than whites. Driving a car, a critical element of the American Dream, is yet another area where being black incurs a surcharge. Studies find blacks are charged higher interest on car loans, quoted higher prices by car dealers and, according to a new ProPublica and Consumer Reports investigation, given far heftier car insurance bills. The report finds that between 2012 and 2014 in California, Illinois, Missouri and Texas, top insurers including Allstate, Geico and Liberty Mutual leveraged “premiums that were on average 30 percent higher in zip codes where most residents are minorities than in whiter neighborhoods with similar accident costs.”

Those premium variances can ultimately amount to significant differences in blacks and whites’ monthly cash expenditures, hurting African Americans’ buying power in other areas and life outcomes in general. ProPublica cites Chicagoan Otis Nash, who is black and lives in a majority-black neighborhood, and pays $190.69 a month in insurance costs for his Honda Civic LX, the only means he has of getting to his two jobs during his six-day workweek. Across town, Ryan Hedges, who is white and lives in a white neighborhood, is billed just $54.67 a month for insurance on his 2015 Audi Q5 Quattro. Based on a series of issues, from car cost to the number of accident claims filed in their respective communities, Nash’s insurance premiums should be lower than Hedges’. Instead, as ProPublica notes, Geico “actually give[s] a discount to the riskier white neighborhood.”

This practice of price gouging on insurance premiums for residents of black neighborhoods — which is another way of saying black drivers — held true again and again. The investigation looked at “more than 100,000 premiums charged for liability insurance” in the “four states that release the type of data needed to compare insurance payouts by geography.” Investigators defined “minority zip codes” as those with more than 66 percent non-white residents in California and Texas, and 50 percent in Missouri and Illinois, due to demographic demands.

The authors point out that while regulation of the car insurance industry varied in the states surveyed (California has the most government oversight in this area while Illinois rates near the bottom of the national list), those differences offer a broad-view look at how racist car insurance policies proliferate around the United States. “Some insurers whose prices appear to vary by neighborhood demographics operate nationally,” they write. “That raises the prospect that many minority neighborhoods across the country may be paying too much for auto insurance, or white neighborhoods, too little.”

“In all four states, we found insurers with significant gaps between the premiums charged in minority and non-minority neighborhoods with the same average risk. In Illinois, of the 34 companies we analyzed, 33 of them were charging at least 10 percent more, on average, for the same safe driver in minority zip codes than in comparably risky white zip codes. (The exception was USAA’s Garrison Property & Casualty subsidiary, which charged 9 percent more.) Six Illinois insurers, including Allstate, which is the second largest insurer in the state, had average disparities higher than 30 percent.

While in Illinois the disparities remained about the same from the safest to the most dangerous zip codes, in the other three states the disparities were confined to the riskiest neighborhoods. In those instances, prices in whiter neighborhoods stayed about the same as risk increased, while premiums in minority neighborhoods went up.

In Missouri and Texas, at least half of the insurers we studied charged higher premiums for a safe driver in high-risk minority communities than in comparably risky non-minority communities. And even in highly regulated California, we found eight insurers whose prices in risky minority neighborhoods were more than 10 percent above similar risky zip codes where more residents were white.”

As always, respectability politics — America’s favorite lie, which holds that success will save black folks from racism — proves useless. ProPublica spoke with Los Angeles-based businessman Pernell Cox, a resident of a “wealthy enclave in South Los Angeles sometimes referred to as the ‘Black Beverly Hills.’” Turns out the Liberty Mutual subsidiary that insured Cox’s cars “charges 13 percent more for a 30-year-old female safe driver in his neighborhood than in a zip code with comparable risk in Woodland Hills, a predominantly white suburb in north Los Angeles.” Cox’s two Mercedes-Benzes, career success and address couldn’t surmount the extra price of race.

“Learning that our community might be targeted for higher insurance rates than the risk is a reason for people to be angry,” Cox told Chicago’s ABC affiliate.

Redlining, common American discriminatory practices that historically kept black people from buying middle-class homes and acquiring equity-building loans, was outlawed decades ago. But while anti-discrimination is a critical element in combating pervasive racism, laws can only curb unfair business practices to a point. From the moment ordinances were passed to stop bias in selling and lending, covert workarounds were created to ensure the system remained unchanged. Bill Corley, an African-American car insurance agent in the field since 1977, describes how the subterfuge works.

“Officially, you could write insurance anywhere you wanted to write insurance,” Corley told ProPublica. Unofficially, too many minority clients inspired questions Corely rarely saw asked about white clients. “They would ask you questions about people’s income levels and questions about neighboring properties — which I don’t really recall ever having to address when I was writing policies in other neighborhoods in the city.”

Today, the use of neighborhood racial demographics is an altogether unsubtle way insurers continue to shortchange black drivers. The effects of those discriminatory practices do more than siphon off dollars once they month; they cause a ripple effect, hurting black financial prospects overall. ProPublica found that “households in minority-majority zip codes spent more than twice as much of their household income on auto insurance (11 percent).” That’s money diverted not just from short-term necessities but from long-term investments as well, such as homeownership, which blacks are still denied loans for far more often than whites.

A 2017 study found that education attainment, spending, working endlessly or raising kids in a two-parent family never closes the ever-expanding racial wealth gap, the $13 to $1 net wealth difference between white and black households. Longstanding racial privilege, codified into programs like the GI Bill, helped build white wealth. Those assets and monies, particularly in the form of property, were handed down, giving successive generations of whites a leg up on their black contemporaries.

“Homeownership is the central vehicle Americans use to store wealth,” Demos senior policy analyst and study co-author Catherine Ruetschlin told Forbes, “so homeownership and access to homeownership are at the heart of that widening wealth gap.”

Who can save for a house when you’re being unfairly nickel-and-dimed at every turn, on every front? The extra expense of being poor, we’ve long known, keeps people trapped in cycles of poverty. Add institutional racism to that equation, and the ante is effectively upped. As the case of Pernell Cox proves, a nice home and the right degree can’t break the system, which was fixed long ago.

Otis Nash says he’s on the “verge of homelessness” because his car costs are so exorbitant. ProPublica reports that he was nonplussed by the discovery that race weighs so heavily in his insurance payments.

“When you go to the richer neighborhoods, the red-light cameras kind of go away,” he told the outlet. “That system is kind of designed for you to fail.”

 

 

DOJ Sues JP Morgan for Racial Discrimination

In yet another case that likely will met its end under a Chumph racist administration looking to legalize the practice of Mortgage redlining against Minorities…

The DOJ filed suit today against JP Morgan for its role in charging Minority buyers higher rates then equally credited whites.

The suit claim that the bank charged African-American and Hispanic borrowers more than white borrowers with the same credit profile.

The United States on Wednesday sued JPMorgan Chase & Co, accusing the bank of discriminating against minority borrowers by charging them higher rates and fees on home mortgage loans between 2006 and at least 2009.

Filed in a Manhattan federal court, the government’s complaint accused the bank of violating the U.S. Fair Housing Act and the Equal Credit Opportunity Act by charging thousands of African-American and Hispanic borrowers more for home loans than white borrowers with the same credit profile.

JPMorgan Chase and U.S. Attorney Preet Bharara did not immediately respond to requests for comment.

The alleged discrimination involved so-called wholesale loans that were made through mortgagebrokers the bank used to originate loans, the complaint said. Chase allowed brokers to change rates charged for loans from those initially set based on objective credit-related factors, the complaint said.

Chase did not require mortgage brokers to document the reasons for changing rates and failed to address racial discrimination, encouraging it to continue, the complaint said.

 

Black White Wealth Gap in DC…Likely to Get Worse Under the Chumph

Black workers are more likely to be employed in the public sector than are either their white or Hispanic counterparts. In 2011, nearly 20 percent of employed Blacks worked for state, local, or federal government compared to 14.2 percent of Whites and 10.4 percent of Hispanics.

Blacks are 30 percent more likely than nonblacks to work in the public sector, according to the University of California, Berkeley’s Center for Labor Research and Education. And roughly 21 percent of black workers are public employees, compared with 16.3 percent of nonblacks.

So when Putin’s bitch says he is going to “reduce government” who exactly gets hurt here?

George W. Bush (AKA the Bushit) “privatized” significant swaths of the Federal Government by outsourcing jobs to the private sector resulting in “whitening” Government.

More than a third (36.2%) of the Military are Minorities. Depending how you count (multiracial, other, etc) something between 17 and 20% of the US Military is black.

Partially as a result, the “wealth gap” between black and white is very bad in Washington, DC.

In D.C., White Families Are on Average 81 Times Richer Than Black Ones

Other major cities aren’t much better

The wealth discrepancy between blacks and whites is one of the most stark examples of inequality in America. White American families have, on average, around $142,000 in savings and assets, minus debt. Black families’, meanwhile, amounted to only $11,000, according to a 2014 Pew Research study. The gulf between black and white wealth is the worst it has been since the 1980s. Put differently, an average white family has 13 times the wealth of an average black family.

But as though the median numbers for the country as a whole weren’t bad enough, things look much worse in America’s cities, according to a new paperfrom the Urban institute—even cities such as D.C. where the prevalence of public-sector jobs, a large black population, and a high share of black business owners might make it seem like a place that black families could thrive. But in Washington D.C., the median white family has a staggering 81 times as much wealth as the median black family.

D.C. is not an outlier: In general, urban areas have much more severe racial inequalities, in part because of the concentration of white wealthy people, and the fact that their wealth has not “trickled down” to poor and middle-class black families. According to a 2015  National Asset Scorecard for Communities of Colors, D.C.’s racial wealth gap falls just behind Los Angeles’s, where median wealth for whites was closer to 89 times as much as blacks’. In Miami it was 30 times as high; in Tulsa, 18 times.

Darrick Hamilton, a professor at the New School and one of the authors of the Urban Institute’s study—along with fellow economists Kilolo Kijakazi, Rachel Marie Brooks Atkins, Mark Paul, Anne Price, and William A. Darity Jr.—says that while many ethnic groups might do poorly in one city and thrive in another, that’s not the case for black Americans. “No matter what the geographical context is, black Americans are a low-wealth group,” he told me. “I think the disparities are going to be dramatic wherever we look.”

Hamilton says that while the statistics about magnitude are useful for distilling the gap in balance sheets, they do little to capture what the wealth gap means for black families. In practice, less wealth means diminished access to the education and opportunities that help many Americans reach the middle class. Less wealth decreases opportunities for savings, homeownership, and economic security. And limited wealth accumulation also means that parents and grandparents have little to pass along to the next generation—from paying for school to helping with down payments—which dampens opportunities for intergenerational mobility.

D.C.’s wealth inequality stems from a combination of factors. According to the study, homeownership plays a significant role: Whites living in the District are much more likely than blacks to own homes—something that’s true around the country. In the District, whites with less than a high school education were more likely to own their homes than blacks at any education level, even those with college degrees. And for those who do own their own place, home values for black owners were around $250,000, about 30 percent less than the average value for white owners. Blacks in the District have a much higher unemployment rate, lower education rates, and are much more likely to have received a subprime mortgage.

The District’s racial wealth divide has old and deep origins in centuries of racist policies. The authors highlight a few in particular: the “black codes” of the 1840s, which prevented black people from owning successful stores or working in certain professions; the return of land in the District to the South in the 1870s, which decreased opportunities for ownership among newly freed blacks;  the demolition of Barry Farms—a black enclave founded by freed blacks—in the 1940s to make way for public housing and highway projects; the wave of “urban renewal” projects that swept out black businesses and residents in the 1960s and 70s. The effects of these policies have never been adequately dealt with. “Black people in D.C. have faced more than two centuries of deliberately constructed barriers to wealth building, and some of the highest barriers were embedded by design in law,” the study says….More…

 

The Whites Only House – Another Chumph Appointee…Another Bigot

 

 

Bank Led By Donald Trump’s Top Treasury Contender Accused Of Racist Lending

OneWest allegedly avoided lending to communities of color.

A California bank led by Donald Trump’s reported likely treasury secretary, Steven Mnuchin, is facing new allegations of racist lending practices.

OneWest failed to locate bank branches in minority neighborhoods, loaned money to “very few or no” people of color, and did a better job maintaining and marketing foreclosed homes in mostly white neighborhoods, according to a complaint filed by two housing advocacy groups Wednesday with the U.S. Department of Housing and Urban Development.

The discrimination, called “redlining,” keeps communities of color in poverty by making it harder to buy homes. It was banned in 1968 under the Fair Housing Act.

The complaint was filed against CIT Group, the commercial lending giant that owns OneWest. Mnuchin, who led the investor group that bought OneWest in 2009 and served as its chairman, joined the board of CIT after the acquisition was completed in August 2015.

“Our analysis of OneWest suggests the bank has no significant branch presence in communities of color,” Kevin Stein, deputy director of California Reinvestment Coalition, one of the two nonprofits that filed the complaint, said in a statement. “[N]ot surprisingly, its home loans to borrowers and communities of color are low in absolute terms, low compared to its peer banks, and low when compared to what one would expect, given the size of the Asian American, African American, and Latino populations in California.”

Dune Capital, the hedge fund where Mnuchin works, did not respond to a request for comment on Wednesday.

“CIT is committed to fair-lending and works hard to meet the credit needs of all communities and neighborhoods we serve,” a spokesman for CIT said in a statement emailed to The Huffington Post on Thursday evening. 

In the Los Angeles area in which OneWest operates, black borrowers last year received just 1.7 percent of its mortgages ― 2.1 percentage points below the industry average. Asian Americans made up 8.4 percent of the bank’s borrowers ― 3 percentage points below the industry average. Latinos comprised an additional 8.4 percent of borrowers ― 14 percentage points below the industry average. Meanwhile, the bank awarded 82.4 percent of its loans to white people ― 14.6 percentage points above the industry average.

One-hundred percent of foreclosed homes ― also known as real estate-owned properties ― in neighborhoods of color had five or more maintenance or marketing failures, including trash strewn in the front yard, overgrown grass and shrubbery, and boarded up or broken doors and windows. By contrast, 33.3 percent of foreclosed properties in white neighborhoods sustained the same blight.

The complaints cast an ugly light over the man Trump officials have floated as the leading candidate to lead the Department of Treasury.

Mnuchin led the group of investors that bought OneWest, then called IndyMac Bank, from the Federal Deposit Insurance Corp. in 2009 after the company had collapsed under the weight of bad home loans it made during the housing bubble. As part of the deal, the FDIC agreed to take the hit for the vast majority of loan losses, an arrangement the agency made with buyers of other banks after the crash. OneWest then went to work foreclosing on homeowners, using the fraudulent, corner-cutting technique known as robosigning. In the years that followed, it paid billions of dollars in profits to its investors.

The investor group included private equity financial institutions specialist J.C. Flowers; hedge fund billionaire John Paulson, who later became famous for his massive bet against the U.S. housing market; and progressive philanthropist George Soros.

OneWest was not the only bank to make bad loans during the housing bubble and push people out of their homes once things soured. However, in an industry we now know was filled with fraud, “OneWest stood out,” wrote David Dayen, the author of a book on the foreclosure crisis published this year. “It routinely jumped to foreclosure rather than pursue options to keep borrowers in their homes; used fabricated and ‘robo-signed’ documents to secure the evictions; and had a particular talent for dispossessing the homes of senior citizens and people of color.”

 

DOJ Outs Donald Trump’s Housing Discrimination

Shouldn’t be a big surprise…And Trump continued racist housing discrimination for years.

DOJ: Trump’s Early Businesses Blocked Blacks

A 1973 suit against Trump and the Trump Organization claimed that superintendents at Trump properties would mark African-American applications with a ‘C’ for ‘Colored’ and other racial codes.

When an African-American showed up to rent an apartment owned by a young real-estate scion named Donald Trump and his family, the building superintendent did what he claimed he’d been told to do. He allegedly attached a separate sheet of paper to the application, marked with the letter “C.”

“C” for “Colored.”

According to the Department of Justice, that was the crude code that ensured the rental would be denied.

Details of this secret system, as well as other practices that the Trump organization allegedly used to exclude black residents from its buildings in Brooklyn, Queens, and Norfolk, Virginia in the 1970s, were recorded in a lawsuit brought by the DOJ against Trump and his father, Fred, in 1973 for alleged violations of the Fair Housing Act.

The Trumps responded to the Department of Justice with characteristic combativeness. They counter-sued the federal government for $100 million, while the family’s infamous lawyer—the Joe McCarthy aide turned mafia counsel Roy Cohn—attacked a prosecutor for being a “hot-tempered white female” while slamming the investigation as “Gestapo-like.” Extensive court documents, unearthed by The Daily Beast, provide a window not only into alleged discriminatory practices at the heart of Trump’s early real estate empire, but also into the family’s attack mode, which echoes Trump’s current slash-and-burn campaign for the White House.

A Secret Racist Code

The lawsuit—which Trump Management settled in 1975 with a consent decree, and which they noted at the time did not constitute an admission of wrongdoing—detailed numerous instances of a racial code that Trump-owned buildings allegedly used to indicate if an applicant was black or otherwise “undesirable.”

A super who worked for the Trumps, Thomas Miranda, allegedly told the DOJ that Trump Management staffers had instructed him to “attach a separate sheet of paper to every application submitted by a prospective ‘colored’ renter.”

“Miranda was to write a ‘C’ in order to indicate to management that the prospective renter was ‘colored,’” the DOJ noted in court documents.

Elyse Goldweber, an attorney on the case, claimed Miranda had been reluctant to talk to her and have his name disclosed because “he was afraid that the Trumps would have him ‘knocked off.’” Miranda was also allegedly afraid to reveal to the Trumps that he was Puerto Rican and instead told them he was South American because he thought they “did not want Puerto Ricans living or working in the building,” according to Goldweber’s documentation.

In another instance, Goldweber said, Miranda told another tenant that Trump’s central office did not want him to rent to an Indian man—and that they only agreed to rent to the individual after they found out he had United Nations connections and that a rejection “might cause an unnecessary confrontation.”

He was personally ordered to rent only to “Jews and executives” and to discourage blacks from renting.

Miranda later denied in sworn testimony that he’d said such things to the DOJ. He testified that he went to talk to the Trumps after prosecutors paid him a visit and told “Mr. Trump,” who was a “busy man,” that he wanted no part in the case.

But according to other court documents from the suit, Thomas Miranda was not the only staffer who claimed to know of a secret racial code.

According to the DOJ, a former super at Trump’s Highlander complex claimed that he would also attach a coded piece of paper to let the “central office” know that an applicant was black. He added that a number of supers in Queens used a “phony lease” to enable them to refuse apartments to people of color. The super’s assistant backed up his story about the code and said she was told, “Trump Management tries not to rent to black persons.”…More on Trump’s Discrimination Here…

 

Redlining Collection of Debt Through the Courts

One of the impacts in the differential in generational and saved wealth among black and white families is black families have fewer resources from which to draw in the event of unexpected bills or crisis. A corrupt legal system backs tis – a person who can’t pay a $300 utility bill certainly cannot afford $3000 or more for a Lawyer, so these almost always automatically go to judgement, whether the person actually owes the debt or no. Further, collections companies are allowed to tack on obscene fees and “interest” on the debt from 30%-100% further burying the victim. Welcome to the new American Slavery through the virtual debtor prison.

 

The Color of Debt: How Collection Suits Squeeze Black Neighborhoods

Our first-of-its-kind analysis shows that the suits are far more common in black communities than white ones.

ON A RECENT SATURDAY AFTERNOON, the mayor of Jennings, a St. Louis suburb of about 15,000, settled in before a computer in the empty city council chambers. Yolonda Fountain Henderson, 50, was elected last spring as the city’s first black mayor.

On the screen was a list of every debt collection lawsuit against a resident of her city, at least 4,500 in just five years. Henderson asked to see her own street. On her block of 16 modest ranch-style homes, lawsuits had been filed against the occupants of eight. “That’s my neighbor across the street,” she said, pointing to one line on the screen.

And then she saw her own suit. Henderson, a single mother, fell behind on her sewer bill after losing her job a few years ago, and the utility successfully sued her. That judgment was listed, as well as how one day the company seized $382 from her credit union account — all she had, but not enough to pay off the debt.

As the lines of suits scrolled by on the screen, Henderson shook her head in disbelief, swinging her dangling, heart-shaped earrings.

“They’re just suing all of us,” she said.

That’s not only true in Jennings. The story is the same down the road in Normandy and in every other black community nearby. In fact, when ProPublica attempted to measure, for the first time, the prevalence of judgments stemming from these suits, a clear pattern emerged: they were massed in black neighborhoods.

The disparity was not merely because black families earn less than white families. Our analysis of five years of court judgments from three metropolitan areas — St. Louis, Chicago and Newark — showed that even accounting for income, the rate of judgments was twice as high in mostly black neighborhoods as it was in mostly white ones.

These findings could suggest racial bias by lenders or collectors. But we found that there is another explanation: That generations of discrimination have left black families with grossly fewer resources to draw on when they come under financial pressure.

Over the past year, ProPublica has investigated a little-known but pervasive shift in the way debt is collected in America: Companies now routinely use the courts to pursue millions of people over even small consumer debts. With the power granted by a court judgment, collectors can seize a chunk of a debtor’s pay. The highest rates of garnishment are among workers who earn between $25,000 and $40,000, but the numbers are nearly as high for those who earn even less.

Despite their prevalence, these suits remain remarkably hidden, even to people in the communities most burdened by them.

In the city of St. Louis and surrounding St. Louis County, where Jennings lies, only about a quarter of the population lives in neighborhoods where most residents are black. But over half of court judgments were concentrated in these neighborhoods.

Armed with these judgments, plaintiffs — typically debt buyers, banks, hospitals, utilities, and auto and high-cost lenders — have seized at least $34 million from residents of St. Louis’ mostly black neighborhoods through suits filed between 2008 and 2012, ProPublica’s analysis found.

April Kuehnhoff, an attorney at the National Consumer Law Center, said that the analysis raised “crucial questions about how racial disparities are entering the debt collection system and what we can do to eliminate these disparities.” The findings, she said, should spur lawmakers to reform overly punitive federal and state collections laws.

Collection suits — typically over smaller amounts like credit card debt — fly across the desks of local judges, sometimes hundreds in a single day. Defendants usually don’t make it to court, and when they do, rarely have an attorney.

For those who do show up, the outcome isn’t all that different. In Missouri, most judgments resulted in the plaintiff attempting garnishment, whether the defendant appeared in court or not, according to ProPublica’s analysis.

In Jennings, which since the 1960s has shifted from almost entirely white to 90 percent black, the suits are unrelentingly common. Between 2008 and 2012, there was more than one lawsuit for every four residents. And yet, this fact astounded residents when they heard it, because it is a facet of life that most keep private. Parents hide it from their children, and neighbors never think to discuss it.

The typical household income in Jennings is about $28,000, an income level at which families spend, on average, all of their income on basic necessities, federal survey data shows. Each paycheck must be carefully apportioned with the most vital costs — mortgage or rent, food and utilities — prioritized.

A garnishment hits this kind of household budget like a bomb. Federal law and most state laws protect only the poorest of the poor from having their wages seized, otherwise allowing plaintiffs to seize up to a quarter of a worker’s after-tax pay. If that paycheck is deposited in a bank, that and other money in the account can be seized to pay down the debt. When garnishment protections do exist, the burden is usually on debtors to figure out if and how the laws protect their assets. …Much more on the story here…

 

Winter In America – the Recession’s Impact on Minorities

This is a discussion of how the “recession” has impacted the Minority communities.

Vodpod videos no longer available.

more about “Recession for Black Folks? No – A Ful…“, posted with vodpod

 

It Used to Be the Bad Guys Robbed Wells Fargo

On July 21, 1873, Jesse James and the James-Younger Gang robbed their first train in Adair, Iowa, of all places. They managed to derail the Rock Island train, turning the train on its side, killing the engineer and injuring a lot of its passengers. But that wasn’t enough terror for the passengers - the James-Younger Gang, clad in Ku Klux Klan garb, went up and down the length of the overturned train confronting them and demanding their watches and valuables (although some reports say they stole only from the men). They threw it all in bags along with the money from the train’s safe and ended up getting about $3,000.

How things changed during the Bushit Hold-up!

Illinois Sues Wells Fargo for Biased Lending

Wells Fargo targeted African-Americans and Latinos for risky, subprime mortgage loans with “reverse redlining” practices, Illinois Attorney General Lisa Madigan says in Cook County Court. The 62-page complaint accuses the bank of a litany of biased and fraudulent practices during the “heyday” of subprime lending.

Madigan says Wells Fargo charged blacks and Latinos much more for mortgages than white borrowers with the same income – and even with lower incomes.

Madigan cites a 2007 story from the “Chicago Reporter” that reported 34 percent of African-American borrowers who earned more than $120,000 received high-cost loans from Wells Fargo, compared to only 22 percent of white borrowers who earned less than $40,000.