Michigan bank 'purged' black clients, destroyed popular BBQ restaurant, lawsuits say

[gollygee]

http://www.mlive.com/news/grand-rapids/index.ssf/2015/10/michigan_bank_purged_black_cli.html

Randall Sandifer and his wife, Ursula Mann-Sandifer, owned the former restaurant at 1200 Wealthy St. SE They met with a bank worker Pat Julien in 2004 and obtained a 20-year, $330,000 construction loan to renovate their restaurant.

They said they were up to date with payments until 2008. Some payments were late, but they were never delinquent. The bank took no action against them.

Then, in December 2012, Mercantile told the Sandifers that their mortgage, $326,362.22, was due that month, attorney Derek Witte wrote in the lawsuit.

Mercantile foreclosed and the popular eatery shut its doors.

[PoliticAverse]

1. "Some payments were late, but they were never delinquent." - if your payment is late,

aren't you by definition "delinquent" until you payment is made?

[haele]

2. No, there's a specific definition of delinquent in certain types of loans and mortgages.

up to 10, 15, or 30 days late is not delinquent depending on the contract, but after the specified grace period is delinquent, and is reportable to credit agencies.
Grace periods for late payments are determined by the lender's book schedule. If the lender reports to the SEC or other regulatory body that it balances the books on the 15th and 30th, that's how it determines what is late and what is delinquent. The payment has to be made and "on the books" before the book is balanced for that reporting period, no matter when the due date is to not be delinquent, even if the funds will not be available to the lender until after the report is made.

So if the mortgage payment was due on the 1st, but they had until the 15th to pay it, with a late fee imposed after the 10th, paying on the 11th is subject to late fees, but the loan is not delinquent.

This is a similar process used by lease managers. Rent is due by the 1st., late if posted or turned in after the 3rd, 5th or 10th, and delinquent (renter is subject to eviction, depending on location) by the 10th or 15th.

Late payments aren't typically tracked, but delinquent payments are.

Haele

[PoliticAverse]

3. Thank you for the extensive explanation. n/t

[1StrongBlackMan]

6. Saved me some typing. n/t

[silverweb]

4. There is a difference in "mortgagese."

http://qna.mortgagenewsdaily.com/questions/late-mortgage-payments-affect-on-credit

[LittleBlue]

5. Something sounds strange. The initial loan in 2004 was for 330k for 20 years

8 years later, 40% of the way through the term of the loan, the balance stands at 326k? I realize interest makes up most of the early payments, but only paying <4k of the balance is much too small for being that far through the loan's term. According to my amortization table, they should be in the 220s on balance after 8 years.

Did they take out additional loans or have a balloon payments, or am I reading this completely wrong?

[Rex]

7. Noticed that too...WTH?

I don't know a lot about the subject, but that stood WAY out.

[pugetres]

8. I was noticing that, too.

I wonder if they neglected to pay the late fees due on top of their regular mtg payments and it started to snowball from there.

[gollygee]

9. I have little understanding of business loans

however I have some knowledge of one business loan for a non-profit. Maybe it's the same? Maybe not. Anyway, you could go a period of time where you paid just the interest. I think the idea was so that your business had time to build up and be profitable before you started paying more.

[gollygee]

11. I also see this - another possibility

"Defendants discriminated against Plaintiffs because of their race by using subterfuge and pretext to get Plaintiffs to pay cash penalties and/or provide additional security for existing debts when the bank simultaneously planned to terminate its banking relationship with Plaintiffs, all without taking the same steps with substantially similarly situated white business borrowers," he wrote.

If thery were getting the to pay a bunch of penalties and pay for additional security, they wouldn't get much of the loan paid off.

[LittleBlue]

12. Interesting

I hope the authorities figure out what happened here. It appears at the very least that the bank took advantage of these small business owners and tricked them into securitizing their loan with an intention to foreclose. Dirty stuff.

[Cal Carpenter]

10. I know a lot of people are going to spot weird details or perceived holes in this story

and assume that the business owners fucked up. Which may be true. We don't know. We may never know. But this lawsuit seems to indicate that this is a pattern right now, with this bank, in this community...

Considering that banks have fucked over minority clients for DECADES in this country - from refusing loans, to offering crappy loans while lying about the specific terms, to using any excuse to foreclose at rates much higher than white counterparts, I'll choose to err on the side of assuming the BANK is in the wrong here. Banks discriminate. It's a fact.