Hispanic with negative home equity and low-income – reason for loan approval?

Deal Score0

A home-equity loan was approved even though the home had negative-equity and the family was low-income(both can be proven). Lender did not consider the children as liabilities, even though the 1040 shows them. Husband is Hispanic and employed, wife is non-hispanic and she is unemployed. Wife was required to sign on mortgage and note as a condition of the loan, and she was listed as Hispanic even though she told the lender not to (lender then said he would have to do all paperwork over if he had to correct it). Lender overappraised the home and borrowers didn’t realize this until much later. I think that maybe the lender had some kind of racial quota to make, and didn’t care if the borrower could repay or not, since the Lender could take the property if the borrowers didn’t pay.
I am looking for reasons that a lender would have for doing this, and whether there is there are specific laws that prohibits it. It caused the borrower to default and lose the home, as they were not able to sell and repay the lender. Can someone cite any authority on this?

3 Comments
  1. Reply
    N
    May 19, 2011 at 2:34 am

    Lenders do not appraise houses.

    Lenders have ZERO interest in taking ANYONES property.
    The usually lose 15-20% on them. If they were to make a profit on them, the previous owner would get a check !

    Sounds like yet another crooked mortgage broker.

    They aren’t lenders. They sell the loan to a lender and make a big commission.

    There must have been some kind of incentive to lending to “non-whites”.

    None of this caused the buyer to default. It probably gave them a lower payment than they otherwise would have got.

    Nobody held a gun to the buyers head.

    But, SUE !

    Afterall, nobody is responsible for their own actions. Its someone elses fault. Always.

    Aint socialism grand ?

  2. Reply
    Trisha O
    May 19, 2011 at 2:42 am

    Someone had a good enough credit score, possibly the wife that’s why she had to sign. I seriously doubt race had anything to do with the loan.

  3. Reply
    sbinlb
    May 19, 2011 at 2:52 am

    When you say things like “borrowers didn’t realize this until much later” – do you mean years and this happened between 2002-early 2007? During that period the standard practices for home loans were no longer in usage and basically anyone whether they could repay or not, were given home loans. Yes, there were many unscrupulous lenders during that period. However, it will be difficult to take any action against them since they are in a completely different line of work – many have moved on to collections.

    Leave a reply

    Register New Account
    Reset Password