Lehman sued for charging minority homeowners

NEW YORK (Reuters) - A Hispanic homeowner sued Lehman Brothers Bank on Thursday, accusing the lender of charging minority mortgage applicants higher fees and interest rates than white customers.



Pedro Rivas, who described himself as a Latino homeowner living in Pecoima, California, filed suit in U.S. District Court in Manhattan, charging the wholly owned unit of Lehman Brothers Holdings Inc with implementing a policy that causes "minority borrowers to pay subjective fees such as yield spread premiums and other mortgage-related finance charges at higher rates than similarly situated non-minority borrowers."

Rivas said Lehman's "pattern of discrimination is not the result of random or non-discriminatory factors. Rather it is the direct and intended result of defendants' business model and loan-funding practices."

Lehman Brothers spokesman Brian Finnegan declined to comment.

Rivas, who is seeking class-action status for the lawsuit, said in the filing that "minorities who borrowed from defendants between 2004 and 2006 were nearly 50 percent more likely than Caucasian borrowers to have received a high-APR (annual percentage rate) loan to purchase or refinance their home."

Rivas said that while Lehman's initial risk analysis applied objective criteria to set a loan's rate, its "discretionary pricing policy authorizes and provides incentives to their loan officers, mortgage brokers and correspondent lenders to mark up that rate later ..."

Last June, Rivas received two loans from Lehman totaling $435,000 to buy his home. He paid origination fees totaling $6,525 and other feels totaling $1,250.

"These fees were higher than fees charged by Lehman Brothers Bank to non-minority borrowers with objective credit risk factors similar to Plaintiff Rivas," the suit said.

I believe my wife and I will be persuing Lehman Brothers also with a suit for our 1991 $189,000 3400sq ft home.

We had a crazy interest rate in the beginning for a yr or so, also the originations fees were higher for some odd reason.

I'll find the article later but Lehman has been up to shady stuff the last few years. They are suing a Japanese firm who fooled them out of $350 million in fraudulent loans. Yea, like no one at Lehman picked up on that till now! BS. I bet Lehman was in on it from the very begining.

http://www.marketwatch.com/news/story/lehman-unlikely-see-losses-alleged/story.aspx?guid={31818395-ACEB-4131-A5AE-43BC1A80432B}&dist=msr_1

Lehman filed a lawsuit in late March against Marubeni, seeking repayment of about Y35 billion in connection with the fraud case, with the Japanese trading house asserting it was also a victim, Kyodo reported.
Kyodo cited its sources as saying the U.S. bank has taken up insurance policies to cover investment losses if they come about from flaws in contracts that go undetected through normal examination. To receive insurance money, however, the bank needs to file a lawsuit against the other party, the sources told Kyodo.
Regarding the matter, Marubeni issued a statement Saturday, again flatly denying responsibility for the case and stating its intention to fight the charge, Kyodo reported.
The fraud in question came to light in March. It involves a former head of medical business firm Asclepius Ltd. and two former contract employees at Marubeni.
On Saturday, Lehman Brothers declined to comment on the matter, including whether it has insurance to cover investment losses, Kyodo reported.
A security house official who is familiar with investment insurance said foreign investors usually have risk management steps such as taking up insurance for investments, Kyodo said.
Marubeni said in its statement that Lehman could have avoided the trouble if it had paid due diligence to the contract, Kyodo reported.
Marubeni issued the statement as the company decided to make clear its stance now that it has come to fully understand the assertion of the Lehman side after receiving a written complaint, officials at its public relations department said, according to Kyodo.