Diverse News 2007®

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Diverse Minority Group Files Suit Against Big Lender

In Precedent Setting Case, Challenges Subprime Lender on Policies & Actions
 Including Redlining & Limiting Access to Credit & Homeownership to Native
    Americans, Persons With Disabilities, African Americans and Latinos

    WASHINGTON, May 9 /PRNewswire-USNewswire/ -- The National Community
Reinvestment Coalition filed a civil rights lawsuit today against the
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.
    "Novastar intentionally structured its underwriting to exclude Native
American tribal communities, persons with disabilities and row house
neighborhoods where African Americans and Latinos reside. Novastar
discriminated against people with the least amount of ability to fight
back. They did it because they thought they could get away with it," said
NCRC President and CEO John Taylor.

    While the lawsuit does not address any predatory lending actions by
Novastar, Taylor said he found it "ironic that Novastar was peddling loans
with exploding interest rates and exorbitant fees to minorities in more
traditional neighborhoods" while denying credit to other borrowers who
qualified for loans.
    Represented by the Washington DC civil rights law firm of Relman &
Dane, NCRC filed a civil rights lawsuit in the United States District Court
for the District of Columbia against Novastar Financial Inc. and its
subsidiary Novastar Mortgage Inc. (Novastar) based on violations of the
Federal Fair Housing Act.
    The lawsuit represents the first time that the Federal Fair Housing Act
has been used to bring civil rights violations against lenders for refusing
to make loans for row houses and adult foster care facilities.
    NCRC alleges in the complaint that Novastar maintains national lending
underwriting and eligibility policies that intentionally discriminate
against Native Americans and people with disabilities. Specifically,
Novastar's underwriting guidelines and policies treat "Properties located
on Indian reservations" and "Properties for adult foster care" as
"Unacceptable" for its lending business. The complaint further alleges that
Novastar also discriminates against African Americans and Latinos through
the use of a "no row house policy" in Baltimore, MD.
    David Berenbaum, NCRC's executive vice president, said the lawsuit is
the "first in a series of fair housing complaints where National Community
Reinvestment Coalition will be acting as a private attorney general by
challenging overt discrimination that lenders are still perpetuating and
regulators are failing to address."
    John Relman, Esq., counsel for the complainant, noted that "NCRC seeks
a declaratory judgment, permanent injunctive relief, and damages for
Novastar 's unlawful behavior."
    Consumers who believe that they have been victimized by discriminatory
lending practices may contact NCRC's civil rights staff either on-line at
http://www.NCRC.org or by calling 800-475-NCRC. Copies of the complaint
also are available at http://www.NCRC.org.

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