Much the same people and organizations who insisted on the issuance of subprime mortgages to “people of color” have now made a claim that former home owners are entitled to damages because they did not / could not pay for the mortgages they insisted on. Much the same lawyers who insisted on these mortgages are now seeking these damages, unless the defendants settle out of court.
The facts for this article, but not all of the legal conclusions, come from an article in the Los Angeles Times on 30 November, 2008. It concerns a complaint filed with the Department of Housing and Urban Development’s fair housing and equal opportunity unit by the National Community Reinvestment Coalition (NCRC) against two of the biggest three Wall Street ratings firms, claiming discrimination against “African American and Latino home buyers.”
This is a first such complaint ever filed, and it takes some explanation of the who the parties are, and what the complaint is really about, to understand the legal game being played. First, the Plaintiff:
The website of the Plaintiff says: “(NCRC) was formed in 1990 by national, regional, and local organizations to develop and harness the collective energies of community reinvestment organizations from across the country so as to increase the flow of private capital into traditionally underserved communities. NCRC has grown to an association of more than 600 community-based organizations that promote access to basic banking services including credit and savings, to create and sustain affordable housing, job development and vibrant communities for America’s working families.”
Nowhere on its expensive and expansive website does the NCRC identify by name a single one of its “600 (member) organizations.” By reading the names of its Board of Directors and their community and legal associations, and the “teaching” programs it is offering some in association with the Department of Housing and Urban Development the complaint becomes clearer.
This organization is an affiliate of both ACORN (of election-fraud fame) and of assorted race-based organizations in the African-American and Hispanic communities. And the associated legal organizations are political allies of the ACLU.
The purpose of the complaint is to get damages from the bond rating agencies because those two racial groups had “disproportionate” amounts of subprime mortgages, and therefore suffered disproportionate losses due to foreclosures. The comparison is with the rates of such mortgages and foreclosures for “non-Hispanic whites.” No comparison is offered for Asian-Americans, who are a small racial minority with probably the least rates for such mortgages and foreclosures.
The complaint was filed against Moody’s Investors Service and Fitch Ratings. Standard & Poor’s Corp., was not named in the complaint because it is “in discussions” with the NCRC. This gives an inkling of what is going on here. This is a standard shake-down. If the NCRC gets a satisfactory payoff from Standard & Poors, they wont extend the complaint against them.
As the complaint states, “Had subprime loans been distributed equitably, losses for whites would be 44.5% higher and losses for people of color would be about 24% lower.” This assumes, of course, that mortgages should be written by banks with no regard whatsoever with whether the borrowers will be able and willing to pay them back.
If the Housing Department throws this complaint out on its ear, which it should do, the NCRC can then go to federal court to pursue its claim. This explains why a complaint concerning national politics set in Washington, and a financial collapse which was centered in New York, was filed in southern California. The lawyers are judge shopping. They are counting on a sympathetic federal trial court when their complaint is rejected. And absent that, they are counting on a sympathetic Court of Appeals in San Francisco, the Ninth Circuit being the most reversed Circuit Court by the Supreme Court, by a wide margin.
The bottom line is straight-forward. The Plaintiff in this case represents those who were at the heart of the mortgage collapse nationally. Their position now is like the sick joke about the man who killed his parents, and then sought leniency because he was an orphan.
This is an absurd claim. But odds are, years of litigation lie ahead before that conclusion is reached.
Source of this story on the Net: