Class Action Suit Filed Against Fannie Mae

Kenneth Harney reported in a recent column that Safiyyah Rahmaan has filed a national class-action suit in federal court against Fannie Mae's automated underwriting system. She charged that, when her application for a $90,000 loan was processed by Fannie Mae's "desk top underwriting system," it turned her down. Her basic charge was that "the system itself is biased against minorities." She charges that the credit-scoring system was built upon data from data from white consumers, excluding data from nonwhite and immigrant consumers. For example, some of these consumers may not be accustomed to dealing with a bank and prefer, instead, to borrow from family members. Nor are new immigrants likely to have credit cards and track records of how well they pay their credit card bills. (A related article on the reliability of automated underwriting systems can be found in the "Industry Trends" section of this month's edition of Spotlight.)