New York City homeowners filed a class action lawsuit on August 12 alleging that auctions of government-insured mortgages discriminate against predominately African-American neighborhoods.
The lawsuit involves a U.S. Department of Housing and Urban Development (HUD) program that since 2010 has auctioned delinquent mortgages insured by HUD’s Federal Housing Administration (FHA).
The program, the lawsuit states, strips homeowners of FHA protections without first informing them that their mortgage could be sold.
The Center for Public Integrity first investigated the HUD program in 2015, finding that the mortgages were sold at a steep discount and only 16.9 percent of mortgages sold between 2010 and 2014 successfully avoided foreclosure.
As part of that investigation, the Center for Public Integrity mapped the results of HUD’s auctions in New York City and Baltimore. The map showed that the mortgages clustered in neighborhoods with a higher proportion of minorities.