LOS ANGELES (Reuters) - Gaps in home ownership rates between minorities and whites will increase because of a change in the U.S. mortgage industry, caused by a credit panic, the chief executive of Countrywide Financial Corp (CFC.N: Quote, Profile, Research), the largest U.S. mortgage lender, said on Thursday.

“The structure of the business is permanently changed … The industry will never be the same,” said Angelo Mozilo, speaking at a real estate conference in downtown Los Angeles.

He said the credit crisis inspired fear among lenders, who are increasingly less likely to lend to risky borrowers.

“As a result, I believe that five years from now, or sooner, there will be substantial disparities between home ownership between whites and minorities,” said Mozilo, whose company is the largest U.S. lender to African-Americans, Hispanics and Asians.

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Dr. Joseph Verdun never wanted to leave his mansion in the Boston-Edison section of Detroit, a short drive away from his closest friends and nestled in a city offering diverse cultural fare.

But his wife, child psychiatrist Harriette Green, worried about the safety of their four children. After they tallied their expenses — the tuition they spent for private schools, auto insurance, city and property taxes — he realized they’d get more for their money in the suburbs. He gave in.

“It’s a sacrifice you make for your kids, so you have peace of mind and they can go to better schools,” Verdun said. “But they don’t have a lot of friends where we live, and that’s a problem.”

In Bloomfield Hills, the couple found serenity, safety and first-rate city services — a world less stressful than the one they knew in Detroit. But life in this predominantly white suburb has been hard on them in other ways: They feel isolated (there is one other black family in their neighborhood), their children were ostracized in middle school, and making connections with other African-Americans means trekking to Detroit on the weekends.

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Morgan Stanley, the American investment bank, is being sued for allegedly discriminating against borrowers from America’s ethnic minorities.

The National Community Reinvestment Coalition (NCRC), a “fair lending” organisation in the United States, has filed a lawsuit in Washington against the bank claiming that it has deliberately failed to offer credit facilities to “African-American, Latino, Native American, Asian and Pacific Islander communities” solely on the ground of race.

It also brought the lawsuit to the attention of the US Securities and Exchange Commission, because the action also alleges that Morgan Stanley breached disclosure rules by failing to reveal to whom they had offered mortgages. The bank vehemently denies the allegations.

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In a report to Congress that’s certain to generate controversy, a new Federal Reserve study concedes credit scores vary “substantially” among different racial and ethnic groups.

The study, mandated by Congress in 2003, looked at a statistically accurate sample of 301,536 people’s ethnicities and credit scores.

Lawmakers ordered the study because critics have long charged that credit scores are biased against African-Americans, Hispanics and other minorities.

But after a massive, multi-year review of three different credit-scoring systems - including one the Fed’s own economists created - researchers concluded that:

Credit scores are highly accurate in predicting future payment performance.

Credit-rating systems aren’t inherently biased, although African-Americans and Hispanics do have lower average scores than non-Hispanic whites and Asians.

The types of loans that various ethnic groups lean toward “do not appear to be the source of differences in (payment) performance once (the) credit score is taken into account.” This counters some activists’ claims that African-American and Hispanics’ credit scores suffer because the mortgage industry steers minorities into risky subprime mortgages.

Some ethnic groups’ payment records are better - or worse - than what their average credit scores suggest.

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The foreclosure crisis now hitting home in Will County is most likely affecting poor and minority neighborhoods the hardest, lending experts say.Nearly a quarter million black and Hispanic families are expected to lose their homes to foreclosure in the next few years. Neighborhoods with large segments of poor and minority populations in Chicago, Cleveland, Philadelphia and Atlanta are registering alarming rises in foreclosure rates, in some cases more than a doubling, according to an analysis of court filings and other housing data by The New York Times and academic researchers.

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Aubrey Lewis was among the first to go, to nearby Oakland in 1977. “We left because of the housing situation,” says Lewis, 77. “And that was early. It hasn’t gotten much better.”

African-Americans are abandoning this famously progressive city at a rate that has alarmed San Francisco officials, who vow to stop the exodus and develop a strategy to win blacks back to the city. In June, Mayor Gavin Newsom appointed a task force to study how to reverse decades of policies — and neglect — that black leaders say have fueled the flight.

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A new study shows that minorities are making equal or even better economic gains than whites when moving to new neighborhoods, but adds that white children still populate the most advantaged neighborhoods in the nation.

On Aug. 12 at the 102nd annual meeting of the American Sociological Association (ASA) in New York, Jeffrey Timberlake, UC assistant professor of sociology, presented his paper, “Scratchin’ and Surviving or Movin’ on Up? Two Sources of Change in Children’s Neighborhood Socioeconomic Status.”

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Three African-American mortgage borrowers from Boston accused Countrywide Home Loans Inc. of racial discrimination in a federal lawsuit yesterday, saying the nation’s largest home lender charged them more for subprime mortgages than it charged white borrowers in similar financial situations.
The lawsuit, filed in US Court in Boston, contended Countrywide violated federal housing discrimination laws because the black homeowners in Boston paid higher fees to the network of agents that generate Countrywide’s new customers. The company, the suit said, uses an ‘‘unchecked, subjective surcharge’’ that adds to the total costs of loans for its customers, and black borrowers, it contended, paid more than whites.

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WASHINGTON - Higher income does not protect blacks and Hispanics from receiving mortgage loans with above-market rates, a new study by a group pushing for reforms to lending laws says.

The report, released Tuesday by the Washington-based National Community Reinvestment Coalition concludes that in 2005 blacks in 171 metropolitan areas were at least twice as likely as whites to receive expensive loans.

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Score one for the ol’ American Dream.

     Many news reports had been telling us it was dead. But the May 21 USA Today offered some hope – and a brand new spin on the class warfare story the media often repeat.

     “I’ve lived the American dream,” said a 55-year-old immigrant from India who now owns a 3,000-square-foot house. The story included several working Americans who were optimistic about their futures. Another was a Hispanic American who expressed confidence in the opportunity for upward mobility.

     The USA Today report showed that working toward the future makes sense, because Americans earn more as they age – a common-sense conclusion that could change the “income inequality” debate.

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