BACKGROUND

According to the Federal Department of Housing and Urban Development (HUD), Brooklyn is currently a “hot zone,” rife with predatory lenders. Such lenders saddle low-income people with unsustainable mortgages on often faulty homes. This type of unchecked predatory lending directly leads to a wave of foreclosures, a situation ripe for phony “foreclosure rescue” schemes. These schemes are typically aimed at families with the least amount of financial and legal literacy. HUD reports that the struggling communities of East New York, Brownsville, Bushwick, and Bedford-Stuyvesant have been particularly targeted by predatory lenders. Brooklyn A is leading the fight against predatory lending in each of these neighborhoods.

Predatory lending has a disproportionate impact on minority and elderly homeowners, as subprime lenders target persons and communities of color. Minority borrowers who should have qualified for prime loans were instead steered toward subprime loans: African-Americans and Latinos were 30% more likely to receive high-rate subprime loans compared with white borrowers, even when controlling for their risk profiles[1]. An analysis by the Urban Institute revealed a clear geographic pattern: nonwhite neighborhoods had the highest densities of high-cost subprime loans, and among these neighborhoods, the highest densities of these loans were in the neighborhoods with the lowest poverty rates.[2]

Even legitimate mortgage loan documents are “mind-bogglingly complex,” the New York Times reports, with “nine out of 10 borrowers unable to specify upfront fees or the exact amount of their mortgage loans.” Con artists trawl through public notices of impending foreclosure actions and go door-to-door in disadvantaged communities, offering their own lawyers to help debtors navigate the paperwork. What distressed homeowners later learn is that this paperwork has actually turned their deeds over to their supposed rescuers, who then strip equity from the property and move to evict their victims.

The success of these housing schemes is dependent upon the perpetrators’ ability to isolate their victims from honest, independent professional advice. But with effective legal counsel victims have a good chance of obtaining redress.

Brooklyn A is doing groundbreaking work in using all relevant claims to fight predatory lenders, including conspiracy to commit fraud, conspiracy to aid and abet fraud, violation of the Deceptive Practices and Equal Credit Opportunity Acts.


DIRECT CLIENT SERVICES

Brooklyn A is committed to ending the cycle of predatory lending in our communities. We are litigating many housing fraud cases in federal and state court: affirmatively suing all participants.

As part of the project against predatory lending, our work includes:

  • Representing homeowners in defining foreclosures that are a result of predatory lending
  • Commencing affirmative litigation challenging predatory lending practices, mortgage fraud, and housing discrimination
  • Investigating lenders, real estate brokers and other advertising heavily in majority-minority communities through posters and transit ads in order to determine the nature of services offered
  • Exposing deceptive advertising and inducement meant to facilitate cases of lending and housing fraud

Our outreach involves the conducting of workshops meant to educate low- and moderate-income homeowners on fair and discriminatory lending practices. This type of educational outreach also includes meetings with local community agencies, organizations, advocate groups, and grassroots and faith-based organizations.

 

For more information on our direct foreclosure work, see our Foreclosure Defense page.



[1] Treuhaft, Sarah, Rose, Kalima, and Tran, Jennifer. Fostering Equitable Foreclosure Recovery. Policy Link. January 2012 available at http://www.policylink.org/site/apps/nlnet/content2.aspx?c=lkIXLbMNJrE&b=5136581&ct=11622025

[2] In the study, neighborhoods were classified as nonwhite if 60 percent or more of the total population was nonwhite. G. Thomas Kingsley and Kathryn L.S. Pettit, High-Cost and Investor Mortgages: Neighborhood Patterns (Washington, DC: The Urban Institute, 2009).