Department of Justice Creates Fair Lending Unit to Fight Discrimination
Responding to the severe housing and credit crisis in the United States, Assistant Attorney General Tom Perez recently announced the creation of a fair lending unit within the Civil Rights Division of the Department of Justice. Perez, who leads the division, identified “lending discrimination” as particularly destructive, stating that “it’s discrimination with a smile, and it tears communities apart.”
Perez cited 38 pending investigations concerning fair lending practices, and said the fair lending unit strategy was two-fold. First, holding accountable the brokers who originated the predatory loans, and second, inquiring into lending institutions that may have discriminated against minorities and deceived unknowing consumers.
Predatory lending has led to a disproportionate number of foreclosures in minority communities, and contributed heavily to the economic crash of 2008. The New York Times reported that during the housing boom, lending institutions and mortgage brokers systematically targeted minority neighborhoods for loans with inferior terms such as high up-front fees, high interest rates, and lax underwriting practices.
In addition to supporting the creation of the new unit to address lending discrimination, The Leadership Conference is urging Congress to create a strong Consumer Financial Protection Agency to centralize and strengthen existing regulation of the financial sector, hold banks responsible for their lending practices, and fill in the gaps where existing laws have failed.