Bloomberg has reported that both Bear Stearns and its EMC Mortgage subsidiary have been accused of predatory loan servicing, specifically targeting black and Hispanic borrowers.
“EMC routinely and systematically mismanaged Hispanic and African Americans’ mortgage loans by charging them unauthorized fees,” four minority borrowers said in a complaint filed today in federal court in Connecticut.
“Many borrowers were trapped into a downward spiral ending in foreclosure.”
Per the article, the plaintiffs are seeking class-action status for their complaint, accusing Bear Stearns and EMC of violating the U.S. Fair Housing Act.
Texas-based EMC Mortgage specializes in the acquisition, securitization, servicing, and disposition of residential mortgage loans.
Last month, Bear Stearns was sued by a shareholder who claimed the company knowingly developed a plan to hide its “tremendously risky subprime mortgage portfolio,” while assuring its investors that the company was properly handling its risk.
In related news, the Federal Reserve announced today that it will hold a meeting next week to propose changes to current mortgage regulations.