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"Report: Some Big Banks' Minority Lending Worsened," by Stacy Kaper, American Banker, April 11, 2006


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 Ripped Off Worse in the Big Apple, by Citigroup and Chase: High Cost Mortgages Spread in Outer Boroughs in 2005, Study Finds -Inner City Press

   New York, April 24 -- Last spring, a statistical firestorm surrounded the release of the 2004 Home Mortgage Disclosure Act data. For the first time, the data set included information about which loans exceeded the rate spread determined by the Federal Reserve, of three percentage points over the yield of Treasury securities of comparable maturity on first lien loans, five percent on subordinate liens. Consumer groups including the Bronx-based watchdog organization Fair Finance Watch released reports showing disparities at some of the largest banks. These were reported on in the English and Spanish-language press. El Diario reported for example that "at Citigroup, Latinos borrowers were 3.92 times more likely to receive the higher interest rate loans than were white borrowers." Soon afterwards the NYS Attorney General (NYAG) requested information behind the data from four large national banks: Citigroup, JPMorgan Chase, HSBC and Wells Fargo. Less than a week later, the Office of the Comptroller of the Currency and the New York Clearinghouse trade association both sued to block this inquiry.

   Now the 2005 data has become available, with a few exceptions, allowing a comparison to the previous year and that degree, identification of trends. Fair Finance Watch today released the first study of the 2005 data in New York City. Citigroup in 2005 confined its borrowers in The Bronx to higher-cost loans above this rate spread over 35 times more frequently than in Manhattan, worse than Citigroup's record in 2004. The Bronx is the lowest income and most predominantly African American and Latino county in New York State. In Brooklyn, Citigroup was almost as disparate. In 2005, Citigroup confined its borrowers in Brooklyn to higher-cost loans above the rate spread 23 times more frequently than in Manhattan. For the entire New York City Metropolitan Statistical Area in 2005 Citigroup confined African Americans to higher-cost loans above this rate spread over seven times more frequently than whites, also worse than Citigroup's record in 2004.

  JPMorgan Chase was nearly as disparate in New York City. In 2005, JPM Chase confined its borrowers in Queens to higher-cost loans above the rate spread 8.64 times more frequently than in Manhattan. Chase's disparities were also intra-borough: in 2005 at JPMorgan Chase African Americans in Manhattan were confined to higher cost loans over the rate spread 11.42 times more frequently than whites in Manhattan.

 Redlining and continued disproportional denials to people of color are also evidenced by the 2005 data for NYC, the Fair Finance Watch study says. Citigroup denied applications from The Bronx 4.62 times more frequently than applications from Manhattan; the disparity at Wells Fargo was nearby as bad, at three-to-one. While the disparities are nationwide, they are more pronounced in New York City. Nationwide for conventional, first-lien home purchase loans, Citigroup denied the applications of African Americans 2.69 times more frequently than those of whites, and denied the applications of Latinos 2.02 times more frequently than whites, both disparities worse even than in 2004. Bank of America in 2005 was more disparate to Latinos, denying their applications 2.38 times more frequently than whites, and denying African Americans 2.27 times more frequently than whites.

  The banks at issue have tried to blur the issues, in strikingly similar cover letters they sent along with the data. Citigroup's senior vice president Eric Eve, for example, wrote in a March 30 letter that "Citigroup, as we expect will be the case with most other lenders, will show a greater percentage of loans above the threshold for 2005 than 2004... The issue is the narrowing gap between short- and long-term interest rates, a phenomenon known as the 'flattening yield curve.' This is not an indication that borrowers were treated differently in 2005."

  Based on Citigroup's 2004 disparities reported, for example, by
El Diario, merely denying that practices in 2005 were different that in 2004 might seem to be a strangely limp defense. In fact, Citigroup's 2005 data show worsening disparities. In the state's poorest and least white county, The Bronx, for example, Citigroup confined 7.39% of its borrowers to higher cost loans over the rate spread -- 35.19 times more frequently than in more affluent and less minority Manhattan, where only 0.21% of Citigroup's borrowers were confined to rate spread loans. While of the five boroughs, The Bronx had the highest percentage of loans from Citigroup over the rate spread, Citigroup's percentage of higher cost loans in each of the four outer boroughs was higher than in more suburban, and less diverse, Westchester.

Citigroup's CEO Charles Price and chairman emeritus Sandy Weill were each questioned directly about these patterns on April 18 at the company's annual shareholders' meeting at Carnegie Hall. Mr. Weill referred the question to Mr. Prince, who said that the issues are "too complex to be addressed in this forum," adding that the disparities were clearly not so bad that the Federal Reserve would continue to block Citigroup from large mergers. His reference, repeated throughout the shareholders' meeting, was to the Federal Reserve's recent lifting of its year-old ban on significant expansion, which took place before Citigroup's 2005 mortgage data was released.

  Mr. Prince's claim that the Federal Reserve has implicitly condoned the disparities in Citigroup's 2005 mortgage data appears dubious. As was pointed out at the shareholders' meeting, the 2005 data was released after the Fed lifted its ban on significant expansion. And the lifting of the ban, at most, only puts Citigroup back on par with its competitors, including for example HSBC.

   HSBC's March 29 letter accompanying its data is nearly identical to Citigroup's, concluding that "had the yield spread between short term and long term interest rates stayed at the 2004 levels, far fewer longer maturity loans would have exceeded the thresholds in 2005. Consequently, a meaningful comparison of the rates at which loans exceeded the rate spread between 2004 and 2005 cannot be made."

While it may be true that a comparison of the raw percentages of a lender's 2004 and 2005 loans that exceeded the rate spread should also take into account "the effect of monetary policy" (as Citigroup's March 30 letter puts it), there is no reason that the disparities between white and African Americans and Latinos cannot be compared year to year. In this comparison, the NYAG Four were more disparate in 2005 than in 2004.

  And the 2005 disparities extended beyond this quartet. Strikingly the largest lender, both prime and subprime, to African Americans in NYC in 2005 was Ameriquest and its affiliates including Argent, which made 6394 loans in NYC in 2005, 4656 (or 72.8%) of them over the rate spread. Ameriquest recently settled charges of predatory lending for $325 million, while leaving its Argent affiliate entirely unreformed. In NYC in 2005 Washington Mutual and its higher-cost affiliate, Long Beach Mortgage, together confined their borrowers in The Bronx to higher-cost loans above this rate spread over 35 times more frequently than whites, worse than their record in 2004. ICP's analysis of other NYC lenders continues. Some lenders are trying to avoid such comparisons by only providing data to the public in unanalyzable form, an evasion it's proved surprisingly difficult to get regulatory guidance on. Evaders for now include New York Community Bank, North Fork / Greenpoint, Lehman Brothers and AIG, down through the NYAG-sued subprime lender Delta Funding Corporation. Each federal regulator has an evader in its midst; none of the agencies has yet acted on this issue.

In New York, the NYAG is now focused on running to become state governor; in any event his inquiry has been blocked for now by the courts. So who will take action, on the disparities in the 2005 data? Given preemption and inertia at the federal bank supervisory agencies, this appears to require regulation from below. As to JPMorgan Chase, the issues can be raised to the Office of the Comptroller of the Currency, on Chase's proposal to buy 338 branches from the Bank of New York. Fair Finance Watch filed such comments on April 10, as reported on Associated Press and elsewhere. Now that Citigroup is no longer explicitly blocked from large acquisitions by the Federal Reserve, its pent-up M&A hunger may soon trigger the Community Reinvestment Act lending reviews that accompany merger reviews. Wells Fargo is embroiled in fights about its environmental record, with no reforms in sight. HSBC is buying, but in Mexico for now. Everything is growing, including the disparities in the data. And what of 2006, the loans being made today? More scrutiny and enforcement actions are needed, to cut through the fogs of the banks' excuses.

Definition: the Federal Reserve has defined higher-cost loans as those loans with annual percentage rates above the rate spread of three percent over the yield on Treasury securities of comparable duration on first lien loans, five percent on subordinate liens.

Source: info [at]

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Argent Mortgage Layoffs, One Week After Ameriquest's $325 Predatory Lending Settlement

 Just after after announcing a $325 million predatory lending settlement by three of its subsidiaries, ACC Capital Holdings on January 30 has reportedly laid off 16% of the workforce of its non-covered subsidiary, Argent Mortgage.  So, analysts wonder, will Ameriquest’s settlement be paid by eliminating what few levels of oversight exist in Argent Mortgage’s subprime lending process?  The layoff reports have reached Inner City Press from impacted employees, one of whom writes:

Subject: Argent Layoffs

Sent: Mon, 30 Jan 2006 16:39:48 -0800 (EST)

From: [Name withheld]

To: Ameriquest-Watch [at]

Argent has laid off 16% of their workforce, approximately 1250-1500 [Editor's note: see 2/1/06 update, below] in job cuts that took place this past Friday and Today. The positions include mostly production jobs, but cuts were also made within their corporate staff. No sales positions were eliminated. One of the biggest changes to come from this consolidation has been the elimination of set-up and doc draw employees. Underwriters will perform the set-up function, and funders will assume the duties of the doc-drawers. Customer service levels and turn time may be affected by these changes.

Layoffs by Location:

200 Doc-drawers and set-up workers in White Plains, NY

~100 Doc-drawers and set-up workers in Schaumburg, IL


Subject: Argent Update 1/30/06

Sent: Tue, 31 Jan 2006 00:26:48 +0000

From: [Name withheld]

To: Ameriquest-Watch [at]

I thought you would be interested to know that Argent Mortgage laid off approximately 16% of its workforce today. Luckily, I still have a job, but I would like to see what you write about it. I find your site very informative.

   Beyond the kind words, one of the questions raises by the specific job-functions that have reportedly been targeted for the layoffs is whether, just after three subsidiaries have settled predatory lending charges, the non-covered subsidiary should be eliminating what oversight it has of its lending process.  What will the attorneys general (or the U.S. Senators considering the nomination of ACC founder Roland Arnall to become U.S. ambassador to the Netherlands) or most importantly the consumers impacted by ACC and Argent have to say about these strangely-timed layoffs? Only time will tell…

  In other media, North Carolina’s attorney general’s spokeswoman has tried to explain the loopholes in the settlement by telling the Charlotte Observer that the settlement was necessarily "limited to activities over which Ameriquest had direct control."  We note that by laying-off 1200 employees at Argent, ACC can claim to have even less control over Argent’s high-cost subprime mortgages. The St. Louis Post-Dispatch has reported on a sample instance of a borrower whom ACC instructed “to file another application - and this time include a letter stating that she owns a cleaning company. ‘They told me what to write,’ she recalls. She says Ameriquest loan officers instructed her to write that she had received an advance of $12,000 to clean two office buildings. It wasn't true, but Hopkins says she and her husband needed the $125,000 loan... They eventually lost the house.” 

In other St. Louis news, Fair Finance Watch has filed comment on the proposed acquisition there of Forbes First National Corporation’s Pioneer Bank & Trust Company by notorious subprime lender National City Corporation – click here to view, and click here for FFW Jan. 30 comments on Whitney National Bank’s attempt to buy 1st National Bank & Trust in Florida.

[Editor's update 1: late on the afternoon of Jan. 31, ACC's spokesman confirmed by email the Argent layoffs, reported 24 hours earlier by Inner City Press. He wrote that "this consolidation increases our efficiency."]

[Editor's update 2: on February 1, ACC emphasized to Inner City Press that while the 15% layoff figure is correct, the individual who first wrote in to us with the employee number over 1,000 was wrong, that the number is 600. Duly noted -- along with ACC's argument that that Argent does not, even cannot, control the mortgages it makes, much less now with 600 fewer employees.]

Predatory Lending Settlement Leaves Out Ameriquest’s Largest Lender, Argent, Critics Say

Jan. 23 – Earlier today, the largest subprime mortgage lending conglomerate in the United States, ACC Capital Holdings Corporation, announced a $325 million predatory lending settlement with the attorneys general of more than 40 states. Almost immediately, questions were raised as to why the settlement does not cover ACC’s subsidiary which made the most high-cost loans in 2004, Argent Mortgage.

            The settlement comes at a convenient time for ACC and its founder, Roland Arnall. In two weeks, the company plans a major multi-million dollar advertising campaign connected to the National Football League’s Super Bowl XV in Detroit. Arnall has been nominated to become the United States ambassador to the Netherlands. He has seen his confirmation stalled for months due to the pending settlement. But given the perceived loopholes in the settlement, critics question whether Arnall’s nomination should be forward in the U.S. Senate.

            In 2004, the most recent year for which Home Mortgage Disclosure Act data is available, ACC’s Ameriquest Mortgage made 185,833 loans, while its Argent Mortgage unit made 215,403 loans, more than half of them over the federal regulators’ high cost definition, of three percent over comparable Treasury securities on a first lien, and over five percent on a subordinate lien.  Studies of the data have shown that ACC and Argent direct a much higher percent of their high cost loans to African Americans and Latinos than is true of other, prime-priced lenders.

            Inner City Press in mid-2005 submitted Freedom of Information Act requests to many states’ attorneys general, for copies of consumer complaints against ACC and Argent. ACC’s legal department opposed the release of any information, resulting in ongoing litigation, including in Texas.

            ACC and its predecessors have previously purported to reform their practices, as far back as 1996 with the Department of Justice and Office of Thrift Supervision (when the company was named Long Beach Mortgage), in 2000 with the Federal Trade Commission, and since. Among those questioning the settlement are class action lawyers, by means of a press release. Consumer protection advocates, however, emphasize the need for binding reforms at ACC including Argent, and not only monetary settlement for past loans.  This is a developing story.

   The settlement has also given rise to questions about the due diligence performed by the investment banks which have helped package Ameriquest’s loans and sell them as mortgage-backed securities, including the three largest banks in the United States: Citigroup, JP Morgan Chase and Bank of America. Each of these three banks has securitized Ameriquest loans, while claiming to screen out predatory loans. With today’s settlements, questions are being raised about these banks previous defenses of their practices.

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Human Rights Are Lost in the Mail: DR Congo Got the Letter, But the Process is Still Murky

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At the UN, Dues Threats and Presidents-Elect, Unanswered Greek Mission Questions

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UN Reform: Transparency Later, Not Now -- At Least Not for AXA - WFP Insurance Contract

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Argent Mortgage Layoffs, One Week After Ameriquest's $235 Predatory Lending Settlement

Ameriquest Settlement: What Does $325 Million Buy? Carte Blanche to Gouge Consumers (and Get Out of Jail as Ambassador to Holland)

Predatory Lending Settlement Leaves Out Ameriquest’s Largest Lender, Argent, Critics Say

Darfur on the Margins: Slovenia’s President Drnovsek’s Quixotic Call for Action Ignored

Who Pays for the Global Bird Flu Fight? Not the Corporations, So Far - UN

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Watching the Detectives: Oversight of the Development Fund for Iraq Will be Discussed at the UN on December 28, 2005

From the UN Budget, Transit Strike, to the USA Patriot Act, 2005 Ends with Extensions

Some previous highlights and special reports:

Citigroup Dissembles at United Nations Environmental Conference

The United Nations' Year of Microcredit: Questions & No Answers

Other Inner City Press reports are archived on -  if you have trouble finding previous articles, please contact us


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