Nationwide Settlement Ends Lending Restrictions on Row Homes, Tribal Communities, Low-Moderate Income Communities and People With Disabilities

WASHINGTON, May 17  /PRNewswire-USNewswire/ -- The National Community Reinvestment Coalition announced today that one of the nation's top mortgage lenders has agreed to change its policies of prohibiting loans secured by properties located on American Indian reservations, row homes and group homes anywhere in the nation.
NCRC and Aegis Mortgage Corporation (along with its two subsidiaries Aegis Wholesale Corporation and Aegis Funding Corporation) ("Aegis Mortgage") have settled a fair lending complaint that NCRC had filed with the U.S. Department of Housing & Urban Development Office of Fair Housing & Equal Opportunity.
The settlement follows NCRC's filing of a civil rights lawsuit last week against Novastar Financial Inc. charging that the subprime lender discriminated against minorities seeking housing in row house neighborhoods and adult foster care in urban areas and on American Indian Reservations.
Under the agreement, Aegis Mortgage admits no liability for violations of the Fair Housing Act, but agrees to change its policies of prohibiting loans secured by properties located on Indian reservations, row homes usually located in inner cities and group homes for people with disabilities. Aegis Mortgage also has agreed to eliminate its $60,000 minimum property value requirement.  NCRC alleged in its complaint that these policies have the effect of discriminating against African American, Latino, people with disabilities and Native-American homeowners.
NCRC President and CEO, John Taylor said, "This agreement between NCRC and Aegis Mortgage will ensure that residents of row homes -- which are primarily found in inner cities of the East Coast and Midwest -- Native Americans, people with disabilities and residents of all communities will enjoy equal access to credit. We trust that other lenders and securitizers with similar policies will follow the lead of Aegis and remove barriers which restrict access to housing for people with disabilities and in minority and low to moderate income communities."
  Under the Agreement Aegis Mortgage will:  -- Not use the property type of row home as an underwriting criterion to     exclude borrowers for any of its loan products.  -- Not restrict lending on improved real property solely because that     property is used as an adult care facility, elder home, or group home     as long as the mortgage loan is made for a "consumer purpose."  -- Not restrict lending on improved real property solely because that     property is located on Native American tribal lands.  -- Not restrict lending on improved real property because the value of the     property is less than a specified amount.  -- Notify the mortgage loan brokers and secondary market investors with     whom it conducts business that it has discontinued these lending     restrictions.  -- Train its employees on its new revised underwriting standards and their     efforts to fully comply with the Fair Housing Act.  -- Pay NCRC $475,000 to support the organization's and its members'     programs to expand equal access to credit.
Michael Balog, Aegis Mortgage Corporation's Executive Vice President, said:
"We have agreed to clarify our underwriting guidelines to remove any perceived barriers to equal access to credit for all eligible borrowers. While the guidelines in question affected only a few of our loan products, it is critically important to Aegis to restate our long-standing commitment to fair lending.  We are pleased to be able to make changes to improve those products and to reach a resolution of this matter......"
David Berenbaum, NCRC's Executive Vice President, noted the importance of the settlement's injunctive and affirmative relief. "NCRC will continue to monitor the company's compliance with the terms of the settlement for a period of years. Further, we hope that this settlement will send a strong message to other lenders and securitizers with more restrictive policies that they are denying the American dream of homeownership in violation of the Federal Fair Housing Act."
The National Community Reinvestment Coalition was represented in this matter by Relman & Dane, a Washington, D.C. based civil rights law firm.  John Relman, one of NCRC's attorneys said, "Aegis Mortgage's elimination of these underwriting policies is a step in the right direction for the mortgage lending industry.  Others who have similar restrictive lending policies should take note and change their policies so that underserved communities are not further injured."  K&L Gates represented Aegis in this matter.
National Community Reinvestment Coalition