Thursday, March 06, 2008; Posted: 10:41 PM
The subpoenas were sent to Countrywide Home Loans Inc and Wells Fargo Financial Illinois Inc. Madigan subpoenaed Countrywide last year in a separate, ongoing case involving loan origination practices.
The action by Lisa Madigan follows a Chicago Reporter magazine study that found Chicago led the United States in high-cost home loans and revealed disparities in loan pricing between white and non-white borrowers.
Madigan said in a statement that her office was looking into reasons for the pricing disparities and whether the differences were based on valid underwriting and credit-worthiness.
Countrywide's lending practices are already being investigated by federal and state authorities and it is being sued by investors and mortgage holders. Wells Fargo denied that race was a factor in its lending and said that credit and risk factors explained all of the differences in pricing.
The Illinois investigation centers on Chicago Reporter findings that black borrowers were three times and Latino borrowers were twice as likely as white borrowers to get high-cost home loans.
Madigan said that Chicago area foreclosures are concentrated in mostly minority communities, which comprise less than 14 percent of the area's mortgageable properties but account for 34.5 percent of foreclosures.
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