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Discrimination by mortgage lenders alleged

July 26, 2007|From the Associated Press

WASHINGTON — The Justice Department is investigating several possible instances of discriminatory mortgage lending, and plans to open more probes soon, an agency attorney told lawmakers Wednesday.

Grace Chung Becker, a deputy assistant attorney general, told a House Financial Services subcommittee hearing that several Justice Department investigations into discriminatory mortgage lending were in progress based on the agency's own leads and referrals from banking regulators.

"We expect to initiate additional investigations in the coming months," Becker said.

A study by the Federal Reserve last year found that 55% of blacks and 45% of Latinos obtained home loans with interest rates that exceeded the prevailing Treasury securities rate by at least 3 percentage points, compared with 17% for whites.

Consumer groups say these data provide evidence of discrimination in the mortgage market.

The banking industry says the figures can be misleading because buyers' credit scores, the quality of the home, the size of the down payment, and other variables are not taken into account.

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