Industry News

NovaStar accused of redlining Baltimore row houses

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Subprime lender NovaStar Financial Inc. has been hit with a Fair Housing Act lawsuit charging that it refused to make mortgage loans for purchases of row houses in Baltimore. The lawsuit, filed Wednesday by the National Community Reinvestment Coalition (NCRC), also alleges that NovaStar had a written policy instructing loan officers to reject mortgage applications involving property on American Indian reservations or homes used for adult foster care. A NovaStar spokesman, Richard Johnson, said the company is "troubled" by "deliberate misrepresentations" by NCRC and looks forward to a "full and fair opportunity to rebut the charges in court." In its complaint, NCRC said that on two occasions in 2006 it used a "tester" to call NovaStar about obtaining a loan on a row house in Baltimore. In the first call in January 2006, "After the tester stated that the house was a row house, the agent stated that the company had stopped financing row houses a few months before the tester's call," the ...