April 28, 2005
Do mortgage lenders charge higher fees and interest rates when writing mortgages for ethnic minorities, the elderly, disabled and other vulnerable groups? New York Attorney General Eliot Spitzer has launched an investigation aimed at finding the answer.
Spitzer's office has sent letters to large New York lenders asking for information on their lending practices and is examining data disclosed by lenders under the Home Mortgage Disclosure Act, The Wall Street Journal reported.
Spitzer, whose name strikes fear in the hearts of financial services executives, has previously conducted devastating investigations into the operations of insurance companies, mutual funds and investment banking firms.
The latest probe appears to be centered on lenders who have large portfolios of subprime loans, meaning loans made to individuals with blemished credit, high debt or minimal income. Citigroup and HSBC Holdings PLC told the Journal they had received the letters and were complying with the request for information.
HSBC owns HFC and Beneficial, which specialize in subprime lending, as does Citigroup's CitiFinancial.
Last year CitiGroup paid $70 million to settle allegations of abuse in its consumer loan operations, including those of its Associates First Capital group, a major subprime lender.
The recent release of data under the Home Mortgage Disclosure Act (HMDA) showed that African-Americans were more than twice as likely as whites to wind up with high-cost subprime mortgages.
