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Groups Oppose Lenders' Attempt to Overturn Montgomery County Law

Tuesday, March 14, 2006

Local and national groups opposing housing discrimination urged the county council of Montgomery County, Md. to support a fair lending ordinance and not reverse its commitment to fair housing for everyone.

Mortgage lenders sued the county for passing an ordinance prohibiting lenders from discriminating. Their lawyers persuaded a judge to delay the new law, supposed to take effect last week, pending a hearing.

Discrimination is already illegal under federal and state laws, and already covers the lenders who are complaining about the Montgomery County ordinance. So it is difficult to see why they claim to be so worried about this new ordinance.

Even before suing, the lenders threatened to pull out of the county, one of the nation's most active housing markets. That tactic worked in some states considering anti-predatory lending laws. So, the lenders seem to reason, why not try it in Maryland against an anti-discrimination law?

Some council members are also trying to repeal the ordinance. Meanwhile, the federal Office of Thrift Supervision also weighed in, saying the savings and loans associations it supervises didn't have to comply with the law.

Today, more than a dozen organizations denounced the lenders' tactics, including the NAACP, the National Council of La Raza and the Montgomery County Southern Christian Leadership Conference.

"It is inconceivable today that mortgage lenders would try to avoid laws prohibiting discrimination in lending," said Julian Bond, chairman of the NAACP. "If lenders abandon Montgomery County because they are afraid of obeying anti-discrimination laws, we have to question whether this is an admission of illegal activity."

Elected officials in the county, next to Washington, D.C., passed the ordinance because they wanted to send a message: They were concerned about discrimination in the subprime mortgage market. The subprime market is where people with blemished credit records borrow, and where most predatory lenders lurk.

The ordinance would hardly frighten responsible lenders, since the law simply lets victims complain to local officials as well as to the federal government.

"It is important to have a local avenue to address predatory lending," says Shanna L. Smith, president and CEO of the National Fair Housing Alliance. "Swift justice is important to establish change; a federal case can take years, whereas a local remedy can be found within months."

The federal government's own statistics show that minorities wind up in the more expensive subprime mortgage market far out of proportion to their share of the population - including in Montgomery County, where statistics show that minority neighborhoods have the preponderance of high-priced loans.

Predatory lenders steal an estimated $9 billion a year from those least able to afford it: the working-class, minorities, the elderly.

The National Council of La Raza said it "applauds Montgomery County's efforts to hold all agents in the home-buying market - including lenders, mortgage brokers, and servicers - accountable to fair housing and equal opportunity laws," said Janis Bowdler, a housing policy analyst at the council. "This law will allow county officials to ensure that all Montgomery County homebuyers are on an equal playing field while trying to secure a home loan."

The group opposing repeal of the ordinance also includes ACORN, the American Indian Heritage and Education Association, CASA of Maryland, the Center for Responsible Lending, the Community Law Center, Consumers Action, the Equal Rights Center, the Leadership Conference on Civil Rights, Maryland PIRG, Maryland Southern Christian Leadership Conference, Montgomery County Southern Christian Leadership Conference, the NAACP, the National Community Reinvestment Coalition, the National Council of La Raza, the National Fair Housing Alliance, the Lawyers' Committee for Civil Rights Under Law, U.S. PIRG and Washington Lawyers' Committee for Civil Rights and Urban Affairs.

"Anti-discrimination laws are the foundation to ensuring that people of color are treated equally," said Wade Henderson, executive director of the Leadership Conference on Civil Rights. "We will vigilantly defend any law, regulation, or ordinance that is designed to ensure equal treatment of all borrowers in the mortgage process."

Read the sign-on letter from the groups above.

Contact: Michael Flagg at 202-349-1862 or mike.flagg@responsiblelending.org