HUD investigating if S.L. lender Security National Mortgage blocked minority loans
HomeHUD investigating if S.L. lender Security National Mortgage blocked minority loans
By Jasen Lee , Deseret News
SALT LAKE CITY — A Salt Lake City-based mortgage lender is under investigation for allegedly refusing to make loans to qualified minority applicants.
The U.S. Department of Housing and Urban Development announced the launch of multiple investigations into the practices of 22 mortgage lenders nationwide — including Security National Mortgage Corp. — to determine if their home loan policies illegally deny qualified African-American and Latino borrowers access to credit.
According to a HUD statement, the investigations are in response to complaints filed by the National Community Reinvestment Coalition claiming the loan activities of the mortgage originators showed that their home lending practices deny FHA-insured loans to minorities with credit scores as high as 640. Federal Housing Administration guidelines allow mortgages to borrowers with credit scores above 580, provided the borrowers have down payments equaling 3.5 percent of the loan amount, or above 500, if borrowers have down payments equaling 10 percent of the loan amount.
"For lenders to deny responsible home seekers this source of credit, without regard for their capacity to repay the loans, would raise serious fair housing concerns and, if proven, undermine our nation's recovery efforts," said John Trasvi<0xf1>a, HUD assistant secretary for fair housing and equal opportunity. "HUD will take appropriate action against any lender found to be engaging in discriminatory practices."
According to the NCRC — a Washington D.C.-based nonprofit association of more than 600 community-based organizations that promote access to basic banking services — their fair lending "testers" evaluated the practices of national lenders, financial services corporations, and other regional and local FHA-approved lenders.
NCRC filed complaints against 22 lenders who have policies the organization claimed violated the Federal Fair Housing Act because the policy had a disparate impact on African-American and Latino communities.
"The decision by some banks to not follow the FHA's policy is cutting qualified borrowers off from accessing credit, and in doing so, causing harm to their ability to prosper, build wealth and for our economy to grow," said John Taylor, NCRC president and chief executive officer.
Taylor said the NCRC has urged federal agencies and regulators to compel the lenders to offer FHA-insured loans to qualified borrowers in accordance with FHA policy.
Under the Fair Housing Act, HUD impartially investigates allegations of housing discrimination and, during every phase of investigations, attempts to settle complaints through conciliation efforts.
Created in 1934, FHA currently insures more than 6.5 million single-family loans. Last year, 80 percent of loans insured by FHA were to first-time homebuyers and more than 30 percent of home loans were to minority homebuyers.
Prior to the recent economic downturn, FHA-insured mortgages combined to make up less than three percent of new home loans. Since the economic crisis, FHA and the Government-Sponsored Enterprises have insured or guaranteed nearly 95 percent of new mortgage loans being originated, a release stated
By the end of 2008, almost half of new home purchase loans and one quarter of new refinance loans were FHA or Veterans Administration insured.
"If our nation is to see the economic progress we all hope for, we must end this policy that has lenders addressing the mortgage needs of the elite, while ignoring the needs of blue collar Americans," Taylor said.
e-mail: jlee@desnews.com