Comments on: Case Study: NAACP v. Novastar

By: amanda kirilenko

amanda kirilenko — Mon, 31 May 2010 04:42:15 +0000

A bank is responsible to set forth limits to sustain it and make sound business decisions. I do not think Novastar was in the wrong. The would-be row house owners had the ability to seek approval at any lending institution they wanted.
If racial discrimination is not the intent I do not feel the business should be liable if proof the reasoning behind the action is fundamentally essential.

By: Kathleen Manford

Kathleen Manford — Thu, 27 May 2010 21:00:05 +0000

I do not believe they intentional discriminated. It did not say they would not offer a loan on a refular SFR or another property. If a lender decides all Pink home have a bigger forclosure rate it is their right to avoid those home. It is unfortunate that one group of people chose to move into that neighborhood, but they said no home loans on Row homes across the board, didnt say what color you were, just specific to the style of home. We are doing that now with manufactured homes.

I believe they could be in violation of the federal Fair Housing Act. I dont think it is intentional but if only one group of people are drawn to a certian type of home or neighborhood, not lending on that style of home is a form of discrimination.

By: Angie Williams

Angie Williams — Wed, 26 May 2010 23:49:19 +0000

Your question is did Novstar engage in racial discrimination? Based on the details provided, I do not feel they did. It does appear they may have walked a fine line within the Fair Housing Laws. According to the Fair Housing Laws within the mortgage lending: no one may take the following actions basedon race, color, national origin, religion, sex, familial status or handicap:
Refuse to make mortgage loan
Refuse to provide information regarding loans
Impose different terms or conditions on a loan
Discriminate in appraising property
Refuse to purchase a lona or
set different eterms or conditions.
If the investor/broker decides to not lend on specific type of housing, that is within their right. Many times the loan is turned away by description of collateral prior to any telephone or in person applciation or interview for the loan.

By: Shawn Lynch

Shawn Lynch — Mon, 24 May 2010 20:21:32 +0000

Did Novastar engage in racial discrimination?
A. Based on the current law and it’s verbiage, the answer I feel is Yes they did discriminate. I do not beleive they ment to and would not have awarded any huge damamges. but there was discrimination. They could have required several layers of protection above an beyond the normal guides to ensure that the Row housing was not being used for anything beyond housing rather than lay down a unilateral denial of that type of housing. . .

Is it possible for a company that does not engage in racial discrimination to still be found in violation of Fair Housing laws?
If yes, how so? If no, why not?
I beleive it is as noted above. I do not beleive NovaStar meant to do anything wrong, but I feel they did.

By: Virginia Miller

Virginia Miller — Mon, 24 May 2010 04:58:49 +0000

I think is is more that the manufatuctred homes do not nearly appreciate like other proeprty types and with the declining market property values it has effected mobiles and manfucatured homes more. This is just my opinion.

By: Jillayne Schlicke

Jillayne Schlicke — Mon, 24 May 2010 04:39:31 +0000

Hi Gina,

Yes, it’s a lender’s choice on what type of property they’d like to have as collateral….provided they are not violating fair housing laws.

Is the present problem of lack of financing for manufactured homes creating more segregated neighborhoods?

By: Virginia Miller

Virginia Miller — Mon, 24 May 2010 04:04:03 +0000

I do not feel that Novas Star engaged in racial discrimination. It is there right to lend on what ever types of proepty they feel like as it is there money. Just like now if I have an applicant wanting to purchase a manufactured home I simply let them know that at this time I do not financing available for manufactured/mobile homes and direct them to several different lenders I knowe that do.

By: Bryce Zimmerman

Bryce Zimmerman — Fri, 21 May 2010 22:59:29 +0000

Did Novastar engage in racial discrimination?

I do not believe that Novastart engaged in racial discrimination, since they clearly demonstrated that Row Housing imposes a higher risk, otherwise any lender today not wanting to finance Manufactured Homes or limit Condo’s could be subject to the same lawsuit. But the ruling may still go against them since this restriction signigicantly impacts a minority.

Is it possible for a company that does not engage in racial discrimination to still be found in violation of Fair Housing laws?
If yes, how so? If no, why not?

Yes, if a neutral decision has an adverse impact on a group protected by HMDA then they can be in violation of Fair Housing

By: Christopher W. Johnston

Christopher W. Johnston — Fri, 21 May 2010 18:50:49 +0000

Did Novastar engage in racial discrimination?
A: Even though I don’t think that was their intent, I believe Novastar is quilty based on how the Fair Credit laws are written. Row housing (accroding to this lawsuit)is predominately made up of african-americans, so denying funding on those simply because it is row housing makes them guilty. Especially given the fact that their own guide doesn’t specifically say they won’t fund on row housing.

Is it possible for a company that does not engage in racial discrimination to still be found in violation of Fair Housing laws?
If yes, how so? If no, why not?
A: Yes, as explained above. May not be their intent but the consequences of their actions proved to be discriminative by nature.

By: Elisa Wu

Elisa Wu — Sun, 28 Feb 2010 05:23:07 +0000

Questions.

Did Novastar engage in racial discrimination?
Is it possible for a company that does not engage in racial discrimination to still be found in violation of Fair Housing laws?
If yes, how so? If no, why not?
Here is a link to the Fair Housing Laws for your review.
Yes, I think it was so obviously Novastar engaged in a racial discrimination, absolutely. “…who were repeatedly treated differently based on protected characteristics of race, color, racial composition, and national origin. Property type is strongly correlated to the racial composition of neighborhoods in Baltimore. Two thirds of all row houses in the city are occupied by African Americans”. Also, they discriminate the property types which is viloted the law of Fair Lending/Fair Housing.

By: Daniel Mulvehill

Daniel Mulvehill — Fri, 26 Feb 2010 22:53:04 +0000

With my lending experience this is definately RED LINING, that is why the Mortgae Companies ie; Nova Star and Bell South shoud of had there loan officers calling on Realtors and other non traditional sources of business for one specific reason to document they are lending ther. In this case its obvious they aren’t interested.They should have some of there products FHA, Conf Conv etc removed from there origination base for income and I quarntee they would change their professional platform lending quickly.

By: Jillayne Schlicke

Jillayne Schlicke — Fri, 08 Jan 2010 18:09:47 +0000

You can also see row houses in Baltimore toward the very end of the movie Red Dragon. Great movie from aways back staring Anthony Hopkins, Ralph Fiennes, Emily Watson, Harvey Keitel, Mary Louise Parker and Edward Norton. This rated R movie is a prequel to Silence of the Lambs.

http://www.imdb.com/title/tt0289765/

By: Jillayne Schlicke

Jillayne Schlicke — Fri, 08 Jan 2010 18:07:19 +0000

Hat tip to ArdellD http://www.twitter.com/ardelld for finding this picture of a rowhouse on Zillow for us:

http://www.zillow.com/blog/norah-jones-in-a-fight-for-windows-on-her-townhouse/2010/01/08/

By: Kimberly Petersn

Kimberly Petersn — Thu, 31 Dec 2009 19:54:46 +0000

I do not believe that they discrimated. They simply put a restriction on the type of housing they would lend on. I do not see this a violation of the fair housing laws.

By: Karen Tuff

Karen Tuff — Thu, 31 Dec 2009 08:29:33 +0000

I do not believe the discrimination was racially motivated but property type. The value of manufactured homes and row houses as defined in Baltimore do not hold the value as well as other property types. Lenders see this as business strategy and REO. I DO believe this inadvertenly creates segregated neighborhoods and in this case, in particular, with people of color. The bigger issue of segregation is created by economic status and opportunity. As we go through the rash of foreclosures/(neighborhoods) now and still ahead of us, the color distinctions will be more broad and at any age catagory of adulthood. Unemployment and economic hardship includes a broader group now than I have ever know it to be, so the segregation will resemble more of an economic nature than just race segregation. So how will the Fair Lending/Fair Housing Act work as the face of economic hardship changes? I see it becoming even more challenging.

By: Jillayne Schlicke

Jillayne Schlicke — Thu, 31 Dec 2009 03:26:28 +0000

Hi Kelly: “It is very difficult to find a lender who will loan money to any investor who has more than 4 financed properties?”

Any lender can create any policy they want. Consider the purpose of the corporation: To make money for its shareholders….within the bounds of the law.

So lenders can have any policy they want; as long as the follow the law.

This includes Fair Lending/Fair Housing.

So the question them becomes, is limiting loans to investors or loans on manufactured housing creating more segregated neighborhoods?

NAACP is arguing that the EFFECT of Novastar’s policy creates more segregated neighborhoods.

The law doesn’t care what your good intentions are. What matters is the EFFECT of the lender’s policy.

By: Harold Burton

Harold Burton — Thu, 31 Dec 2009 03:14:35 +0000

There is no secret that redlining is a tool that has been used by banks over the years to prevent lending in certain ethnic neighborhoods. Yes. Much like WAMU used infalted apprasial to pump value to make there portfolios look good. Novastar was in this community and decided that there was a apparent lending risk lending or row houses. The where very aware of the neighborhood and the residents they effected. To say they did is just not correct.

The Fair Housing Act has a prevision that states. It is enough to show that there action has a disproportionate effect on some group….even if this was not the intent.

These laws where wriiten in this tense because law makers are aware that certain inviduals will try to stretch the rule of fairness for there own purposes.

Here again we have this grey area coming into play. It’s unfortunate that companies have to be taken to task over there lending practices.

Remember many of the individuals living in the row homes had low LTV’s and adequate credit scores.

Redlining is illegal. No grey area there!

By: Chris Yanke

Chris Yanke — Thu, 31 Dec 2009 00:17:28 +0000

I cannot see that Novastar actively engaged in RACIAL discrimination, but it’s obvious they discriminated in terms of property types.
Yes it is possible to engage in other types of discrimination according to the laws. If they discriminate based on age or disability that is also covered in the 1968 and ammendedments thereafter.

By: Kelly Fiscus

Kelly Fiscus — Wed, 30 Dec 2009 23:24:48 +0000

I read this case study again and again I come back to it sounds to me it was the property type. Row house have a higher rate of foreclosure and the lender is choosing where to lend their money.

By: Kelly Fiscus

Kelly Fiscus — Wed, 30 Dec 2009 20:52:43 +0000

I agree it is a difficult case. Lenders do have the right to determine which type of properties they will lend on. Is it discrimination when lenders will not lend to investors? It is very difficult to find a lender who will loan money to any investor who has more than 4 financed properties? Is it fair? It is called business. SFR investment properties have a high rate of foreclosures and the more properties the investor has the greater the risk of foreclosure. So is it discrmination? How is this different than a lender not lending on a condo, mobile or row house. I think it is the property type and not the person.

By: Arash Fiuzi

Arash Fiuzi — Wed, 30 Dec 2009 09:07:39 +0000

I am not sure if Novastar discriminated or not. I tend to think not. However, the problem is the NAACP is going after Novastar and other lenders in multiple states. Rather than empowering and educating african americans about the responsibilities and the benefits of homeownership in a grass roots community out reach, they choose to advance their social agenda in court. At the end of the day if all you have is a hammer, you will go look for some nails to pound.

By: James Haechler

James Haechler — Wed, 30 Dec 2009 05:47:27 +0000

I feel the Lender has a right to decide what kind of property they choose to lend on. Its there money. How many lender choose not to lend on manufactured homes? Pretty much all of them. As long as they don’t discriminate there’s no issue here.

By: Jason Brock

Jason Brock — Wed, 30 Dec 2009 00:18:08 +0000

Case Study NAACP v Novastar:
No the bank did not discriminate saying that they did not want to lend “their” money to purchase a certain type of home. It was not racially motivated it was financially motivated. If only more people where like them “Novastar” and had not granted money for buildings or projects that were failing assets then maybe I the tax payer would not have had to bail them all out… People in business need to stop being so PC and start calling a spade a spade… it was business not racial.

By: Jerrod Goode

Jerrod Goode — Mon, 28 Dec 2009 07:18:27 +0000

I don’t see racial discrimination in this, but fair treatment of all people is very important, so I don’t have a problem with this company being looked at very close. If you are not discriminating based on race prove it and move on.

By: yvette Hobzek

yvette Hobzek — Wed, 23 Dec 2009 04:59:13 +0000

Tough case. I guess you would have to see if Novastar allowed financing on row houses in other states besides Maryland. If they did then it could very well be discrimination but the fact that it was mixed use makes it difficult. Bell said that the program manual did not exclude row houses. As in many other lending guidelines lenders prohibit manufacture and log home financing. You would have to look at all loans Novastar did to find out if they actually excluded row home financing in every state.
About the statement regarding the landlord who does not let a large number of unemployed white people rent in a particular place. Not sure how that is a violation of the law, but I guess it is. If you go through a property management company they want their tenants to make 3 times the annual monthly rent payments. Show a most recent paystubs and tax returns. Their leasing requirements are almost as bad as getting a loan. (Or worse in the hey day of the NINA and SISA loan) if the tenant is unemployed they will not rent to them. I guess all of the tenants that did not qualify could probably sue because of fair housing. This is going on all over the eastside. I will say, the property management agencies did rent to prospective tenants if they had a bankruptcy and a current foreclosure as long as they could show they made 3 times the annual rent. In this case I am talking about the rent was $2,350 and the tenant had to make at least $84,000.00 per year in order to rent. (talk about great ratios).

I guess if you have a jury trial I think it is possible to found not guilty even if you did violate the fair housing law and I am sure it is possilbe to be found guilty even if you did not.