Wall Street Journal reports Citigroup, HSBC have received letters
By MortgageDaily.com staff
4/28/2005

Large mortgage lenders in New York are being investigated by the state's attorney general over possible discrimination, the Wall Street Journal reported today.

Eliot Spitzer, who has announced he will run for governor in 2006, is examining loan-pricing information recently disclosed in HMDA data, the Journal reported -- citing "a person briefed on the situation."

The story said a "handful" of large lenders with subprime operations in New York have been sent letters by Spitzer's civil-rights bureau.

Citigroup Inc. and HSBC Holdings PLC both reportedly confirmed to the publication that they had received the letters.

Citigroup inherited a host of predatory lending problems with its acquisition of the Associates First Capital, while HSBC's acquisition of Household International Inc., a company that had been the constant target of anti-predatory activist group ACORN, left it with its own battles.

The attorney general is looking at whether minorities, elderly and other "vulnerable groups" have been targeted with questionable lending practices, the Journal reported,

The Journal article went on to say HMDA data show that African-Americans were about 4.4 times as likely as whites to pay higher rates at Washington Mutual Inc., compared to 2.5 times for Citigroup.

Federal Reserve Chairman Alan Greenspan recently warned about misinterpretation of HMDA data.

"Specifically, by doing what public policy intended -- increasing credit availability to less creditworthy, often minority, borrowers -- banks might be accused unfairly of discrimination by those who fail to connect risk to price or to evaluate rates in terms of risk measures," Greenspan said at a recent conference for the Independent Community Bankers of America. "I sense that concern about the burden of regulation is high on your agenda."

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