Alpha Mortgage USA Inc. and American Home Mortgage Servicing Inc. engaged in a racially targeted predatory lending practice called "reverse redlining," according to a lawsuit filed in federal court by a black suburban Houston woman.
Nanette Lewis, 44, of Baytown, Texas, alleges she refinanced the adjustable rate mortgage on her family's first home purchase only to be victimized by a loan with onerous terms because of her skin color. She is seeking to have the lien removed from her property and wants others to be informed of what happened to her.
Efforts to reach Alpha Mortgage and American Home Mortgage for comment on Thursday by The Associated Press were not successful.
Lewis' lawsuit may be the first of its kind in Texas. Similar lawsuits have been filed by the attorney general of Massachusetts and by the city of Baltimore, the Houston Chronicle reported Thursday in its online edition. All three lawsuits accuse lenders of "reverse redlining" targeting minority loan applicants for the worst possible mortgage deals, the newspaper said.
In 2006, Lewis and her husband were given last-minute changes at closing. When she asked about the changes, she was told her loan would be refinanced later and that she would be "fine."
"It was just 'sign here, initial here, sign here, initial here.' It was like 'let's get her signed up and let's move on to the next victim,'" Lewis told the newspaper.
It was not until she was laid off and went to Lone Star Legal Aid to determine how to hold onto the home, that she learned the full impact of what she had agreed to. The mortgage was for more than $175,000 on a home valued at about $156,000. Included was more than 10 percent, or $17,654, in points and fees and a $103,000 balloon payment due in 30 years, the newspaper reported.
Legal aid lawyer Sapna Aiyer called Lewis' mortgage terms "horrible, horrible." The lawsuit cites the federal Home Ownership and Equity Protection Act and the Texas Constitution, which bar lenders from excessive points and fees (more than 8 percent) and from certain changes in loan terms at closing.
Aiyer said Alpha Mortgage was the original lender and American Home now holds the loan.
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