Civil rights groups urge freeze on foreclosures

A coalition of civil rights groups asked mortgage lenders to freeze foreclosures for borrowers with weak credit ratings, saying reckless lending practices to minorities caused their predicament.

Lenders, loan servicers and investors in mortgages should agree to a six-month foreclosure moratorium, a group that includes the National Assn. for the Advancement of Colored People, the National Council of La Raza and the National Fair Housing Alliance said in a statement.

Political pressure on the government and regulators to intervene has increased as defaults on sub-prime loans rose to a four-year high and foreclosures on all home loans rose to a record in the last quarter of 2006. As many as 2.4 million Americans may lose their homes because of the collapse of the sub-prime loan industry, the Center for Responsible Lending, also part of the coalition, said in testimony to Congress last month.

“These loans are packaged and sold by Wall Street to investors who knew or should have known that these loans had a higher likelihood of default,” said Shanna Smith, president of the National Fair Housing Alliance. “Now Wall Street is willing to just let the ‘market adjust,’ the ‘market stabilize,’ but at whose expense?”