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03/12/10

Executive Director of the Lawyers Committee Testifies: Loan Scams are a Civil Rights Issue

Barbara Arnwine, Executive Director of the Lawyers' Committee for Civil Rights Under Law, a leader of the Loan Modification Scam Prevention Network, testified before House Judiciary Committee's Subcommittee on Constitutional Rights, Civil Rights and Civil Liberties hearing entitled "Protecting the American Dream: A Look at the Fair Housing Act."  Advocating for the needs of minority homeowners, Arnwine emphasized how important preventing loan scams is to repairing the damage the foreclosure crisis has wrought in minority communities. 

In a thorough and poignant testimony on the Fair Housing Act, Arnwine framed the foreclosure and loan modification scam crisis as a civil rights issue:

More recently, there was an increase in the availability of mortgages to minority communities, but it came primarily through a newly created subprime mortgage market that made mortgages available to higher risk and non-traditional borrowers, albeit at higher interest rates. The subprime market became inundated with widespread discrimination where predatory lenders targeted toxic products to minority communities.    

When backed up by hard numbers, the disparity in subprime lending is shocking, "Analysis of 2006 HMDA data showed  while only 17 percent of white homeowners had subprime loans, 54 percent of African-Americans and 47 percent of Hispanics had subprime loans," according to Arnwine's testimony.

Because of the high incidence of subprime lending to minority communities, the bursting of the housing bubble sent shockwaves through minority communities and tore at the fabric of many neighborhoods.  Compounding matters, unscrupulous and sometimes criminal third-party scammers, con-artists and thieves have been taking advantage of distressed homeowners by peddling fraudulent loan modification services.  Arnwine referred to these scammers as the "second wave" of the foreclosure crisis. 

The Loan Modification Scam Prevention Network hopes that Congress will continue to be a strong and forceful partner in the campaign against loan modification scammers. 

Click here to read Arnwine's testimony, "Protecting the American Dream: A Look at the Fair Housing Act."

Click here to read the press release.