Recent mainstream press stories and TV newsmagazine pieces have highlighted some of the companies that engage in predatory mortgage lending. First Alliance Corporation, a national subprime lender had been under investigation by the Justice Department and in seven other states where it had offices (Illinois and Massachusetts lawsuits are still pending). It recently filed for bankruptcy, thereby freezing all claims unless they are pursued in bankruptcy court. That is little help to its customers, who face high payments or foreclosure, said consumer advocate and researcher Jason Ash of ACORN (the Association of Community Organizations for Reform Now). Delta Financial, another subprime lender, recently settled a lawsuit in New York over predatory practices, especially in minority neighborhoods. Many of the same banks that offer first purchase and refinance loans through their branches also refer loans to their subprime affiliates. According to ACORN, Norwest and Citibank number among them. Also cited were the Wall Street firms of Salomon Smith Barney and Lehmen Brothers, who have profited from predatory mortgage lending by securitizing the loans made by such lenders and reselling them to investors. -caburger@cutimes.com
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