Monday, May 21, 2007

NovaStar accused of discrimination

On May 9, the National Community Reinvestment Coalition filed a lawsuit against NovaStar Mortgage, a subsidiary of NovaStar Financial, accusing the lender of repeatedly violating the Fair Housing Act. NovaStar is said to have repeatedly refused to provide financing for row houses, homes in Indian reservations and on houses that may be used to care for disabled adults.

Such practices are considered a discrimination against ethnic minorities and people with disabilities, because row houses tend to be occupied by African Americans and Latinos, and homes in reservations by Native Americans.

NovaStar called the charges “baseless”, and explained that row houses are associated with appraisal fraud, while homes located in reservations are governed by “different sets of laws”. The Coalition also intends to file lawsuits against other lenders involved in similar practices.

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