Opinion-ist: Racially Targeted Lending Practices? Really?

The opinions expressed in this article are solely those of the author. That being said, we'd like to expound on some news in today's Chronicle, a lawsuit filed in federal court by a Baytown woman against her lender claiming predatory lending practices and reverse redlining (racial targeting). Nanette Lewis and her husband refinanced their home in an effort to obtain a better deal, only to find that the mortage they signed was not only an adjustable rate mortgage, in which the purchaser's payments are subject to change due to rate increases, it included a balloon payment of $103,000 due at the end of the term. Seriously, how do you NOT see a number of THAT magnitude? She would never have known that the loan she and her husband executed was not a "good deal", until she lost her job and sought legal advice, in the event a payment was missed. What we reasonably infer from the Chronicle is that the actual loan documents were not one time, over the course of four years, ever read. "A fool and their money are soon parted". Just saying.

It is our understanding that there are last minute changes to final documents as lenders adjust terms, or in some cases, better the previously quoted rates. A reasonably complete, final copy of all documents is typically provided prior to closing. It is not uncommon for lenders to hurry the closing process, as you have to sign and initial your way into a case of carpal tunnel syndrome (seriously, don't waste tax dollars on that lawsuit, it's a euphemism). Scanning the final set of documents prior to signing for any inconsistencies is good practice, but, first you must either read the documents yourself or utilize the services of a trusted realtor, mortgage broker or attorney. We are certainly not rocket scientists when it comes to legal matters or sometimes finances. However, having reached the age of majority (eighteen) and having educated ourselves and moved toward attainment of the "American Dream", we find ourselves responsible for our actions, all of them. The victories and the pitfalls and the horrible mistakes that cost us some of our hard-earned money. To that end, we commend the Lewis' for sueing for the removal of the lien and to "get the word out about what happened", and not all sorts of additional monies. If successful, however, the lawsuit will leave in it's proverbial wake a mortage to be repaid which is in excess of the value of the property, to the tune of approximately $20,000 and still at an adjustable rate. We do wonder, did they see the "bottom line" on the documents? It should not be about the monthly payment, but, what you pay overall. Caveat emptor, know what you are getting into and what products are available by doing your own research. We know individuals who purchased property and summarily sucked every scrap of equity out by way of cash-out refinancing, in some cases ending up with adjustable rate mortgages. Regardless of race, color, sex, or religion - we don't feel that this is a wise decision, after all our economy is not guaranteed to stay stable or grow. In today's shakier housing and job market, it is becoming more and more glaringly obvious that living and borrowing beyond our means does not pay off.

Bottom Line: P. T. Barnum hit the nail on the head, there is a fool born every minute. It is unfortunate that the Lewis' executed a mortgage not in their best interest, but, any contract that binds an individual for such a long term an a large sum should be completely read and fully understood. At the least, seek the services of an individual who, for a nominal fee, will ensure your best interests are being met and advise you of the potential dangers or downsides.

Here are some comments from the Chronicle:

- She was a victim of predatory lending practices because she signed something she shouldn't

- Please, don't throw down that tired old race card.
Ignorance and ineptitude come in all colors.
She failed in her responsibility to exercise due diligence.
caveat emptor.

- Why does every wrong doing become a race issue? I've been hooked and crooked a few times too. Was it because I was white? I don't think so...I think it was because I was dealing with crooks.

-...and by the way...if they have a low income advocacy group fighting for them (ACORN), why are they living in a 4 bedroom house when their son is in college? Can we say downsize?

-can honstley relate i have been blessed with a beqautiful 2 story home and am a single mom of 3-remaining. this home the owner obviously could not sell, so i am leasing it @ this time, but there were problems and i have the advantage of knowing that these problem will affect this house in the future,and will be the owner's or the banks problem. i would not be intrested in purchasing it. i think it would be great to anyone if we could have the opportunit to have that great advantage to give them a dose of their own medicine...............

Houstonist readers, what do you think? Should someone be protected from themselves, essentially? Are the described lending practices fraudulent, mis-leading or otherwise bad? Please let us know, we're off to scrutinize the two dozen credit card solicitations we received in this week's mail bag, that promise a brighter financial future and low introductory rates. We are looking forward to your comments, thoughts and musings, who knows, perhaps we missed the mark with our humble opinion.

Photo courtesy of flickr user Nick