Matthews v. New Century Mortgage Corp.

Ruth Morgan, an 87-year-old woman, was approached by a man who told her that the siding on her home needed to be replaced. The man convinced Morgan to take out a $17,325 loan. Morgan signed loan papers but was not given an opportunity to review the documents, nor was she given a copy of the documents. The actual loan was made by New Century Mortgage Corp. (New Century) (defendant) and was for $49,000. Morgan made monthly payments believing she was paying off a $17,325 loan. Soon after Morgan signed the contract, however, New Century filed a foreclosure action on Morgan’s home, and Morgan learned the actual terms of her loan. In addition to making a loan for a higher amount than Morgan had agreed to, New Century put false information about Morgan’s occupation and monthly salary on the loan application. New Century engaged in similar tactics targeting additional older, single women. Morgan and the other women (collectively, the plaintiff borrowers) (plaintiffs) filed a lawsuit against New Century in federal district court, alleging, among other claims, that New Century discriminated against the plaintiff borrowers in violation of § 804 of the Fair Housing Act (FHA) and engaged in reverse redlining—an illegal practice that involves creditors providing credit on unfavorable and predatory terms—in violation of § 805 of the FHA and the Equal Credit Opportunity Act (ECOA). New Century filed motions to dismiss the plaintiff borrowers’ claims, arguing that § 804 of the FHA did not apply to the case and that reverse-redlining claims could not be brought under the FHA or the ECOA.