A national report says discriminatory lending practices are occurring in South Carolina and that Columbia, Charleston, and Greenville were in the top 10 in the nation for the unethical practices.
The South Carolina Department of Consumer Affairs (SCDCA) has launched the state’s Mortgage Log System (SCMLS) to fight unethical loan practices and, in essence, remove the bad players from the state’s marketplace.
Charles Knight, a staff attorney with SCDCA says the system was created as a way to track information and detect any discriminatory or predatory lending practices.
Some allegations were made that there was descriminatory lending going on, and more specifically, African-Americans were paying a higher rate of interest than they would otherwise qualify for just based on their credit history. So that was what the allegation was. And that time we didn’t have any information that we had accumulated at the state level so we could either deny or confirm what was going on.
Knight said the state’s tracking system will be more effective than the nationwide version.
We actually collect more information than the federal government does for banks on discriminatory practices. The Federal Reserve actually collects what they call Home Mortgage Disclosure Act information. We collect, actually more information than they do and in that case, it’s the banks also that are putting in that information. But, during an examination we verify that the information is true and correct.
South Carolina is currently the only state able to perform this type of analysis and Knight says the data will help them combat mortgage fraud and discrimination.
Once we have had some time to gather the information, analyze it and do examinations based on it, in the next couple of years we will be able to, I think, get to the point to where, if there is a discriminatory practice, we will know about it prior to anybody filing a complaint with us. And so we will be investigating it already.
Knight says the cost is minimal and will not be passed on to taxpayers.
Businesses will pass on to consumers, ultimately any costs that they have in the cost of doing business. And right now, the cost to run the system and for us to be able to do the analytical is a dollar per loan transaction, which is not very much money at all.
The new program complements the existing Nationwide Mortgage Licensing System database and allows consumers to see if a mortgage professional is licensed in the state and if there has been any disciplinary action taken against them.