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NY Accuses Lender of Racial Bias

BROOKLYN (CN) - U.S. Capital Funding charged black and Latino homebuyers "thousands of dollars more in upfront fees than white borrowers," the State of New York claims in Federal Court. The Attorney General's Office claims that the mean broker fee for minorities was 58% higher than it was for white people, "resulting in an additional charge of about $3,500."

Attorney General Andrew Cuomo says U.S. Capital Funding "served as mortgage broker for approximately 300 home mortgage loans" in New York, "including about 135 loans made to Black and Latino borrowers."

The company "arranged many loans for lenders that specialized in subprime loans, including Indymac and New Century."

Other types of loans show even more lopsided disparities, the complaint states. Blacks and Latinos were charged 121% more for "piggyback loans," given to borrowers who have had first and second liens on their homes, a difference of about $5,360.

The attorney general says that "there is almost no possibility that these disparities occurred by chance."

The state seeks a declaratory judgment, an injunction and punitive damages.

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