Gary retiree Meria Burr was looking for a way to pay off some debts when she went to a Merrillville loan broker three years ago.

A veteran Gary businesswoman, she asked the broker about refinancing a rental home in Gary's Tolleston neighborhood. Weeks later, she walked out of the closing with her debts paid off and a refinance from New Century Mortgage Corp.

She also walked out with something else -- a high interest rate of 10.85 percent.

That added more than $100 to her modest loan's monthly payment.

"I thought it was too high," Burr said on a recent afternoon at her Miller home. "But he (the broker) said, 'Don't worry, in a year or two you can refinance and it will come down.' "

She never was able to refinance, ran into difficulties repaying, and now a Texas bill collector is chasing her for the full amount she borrowed.

Burr had no way to know at the time that it would be impossible to refinance her loan.

She also had no way to know that black homeowners like her were systematically targeted for high-interest loans by mortgage companies and brokers in Northwest Indiana and across the nation during the subprime-lending era.

High rates, unequal treatment

A Times analysis of federal home loan data for Northwest Indiana shows there often was a distinct difference between what happened when a black borrower went for a home loan and when a white borrower did.

When a black borrower received a home loan, 44.5 percent of the time it was a high-interest loan, known as subprime. That compares to 28.4 percent of the time for Hispanics and 18.1 percent for whites.

For black borrowers in Northwest Indiana in 2007, the average interest rate on a subprime loan was almost 10.2 percent -- nearly 4 percent above the average prime rate that year, according to the Time's analysis and Freddie Mac data. For Hispanics it was about 9.9 percent. Freddie Mac stands Federal Home Loan Mortgage Corp., which was created in 1970.

Freddie Mac buys mortgages on the secondary market, pools them and sells them as mortgage-backed securities to investors on the open market.

Those high-interest rates added tens of thousands of dollars in payments over the life of the loans.

Advocacy groups such as the Center for Responsible Lending, based in Durham, N.C., call the targeting of minorities by subprime lenders "reverse redlining" and say it has undone decades of progress in increasing home ownership among minorities. Many of those lenders now are the targets of lawsuits alleging discriminatory lending.

"It went from a time where we had banks refusing to write mortgages, to this flood of loan products targeting the same folks who used to have to beg and plead for capital," said Charlene Crowell, of the Center for Responsible Lending.

The Center refutes the idea that advocates who pressed to enforce the federal fair-lending law, known as the Community Reinvestment Act, contributed to the current crisis. Most subprime lenders were never subject to CRA, and thus had no obligation to lend in minority communities, according to Mike Hudson, a researcher at the Center.

Healthy incomes no protection

The people subprime lenders targeted with high-interest loans in Lake and Porter counties were not poor.

The median income for a subprime borrower was $58,000, according to The Times analysis. The median income for a white borrower was slightly higher at $59,500 and for blacks, slightly lower at $53,000.

In 2007 alone, subprime lenders dished out $112.4 million in subprime loans to black borrowers and $61.5 million to Hispanic borrowers in the two counties.

Credit scores are not included in the data scrutinized by The Times. But the income figures for subprime borrowers appear to show that the higher interest rates minorities were charged on loans were not based solely on creditworthiness.

Reginald Guy sees evidence of discrimination in lending rates every day in his job at the Northwest Indiana Reinvestment Alliance, where he renegotiates mortgages for borrowers in danger of foreclosure.

"Most of these folks I see, when they started out, had healthy credit scores and made good money," Guy said.

Out of the frying pan ...

A study done by the Center for Responsible Lending found that 40 percent of all subprime loans made in the first half of 2007 are now in some stage of foreclosure. Nationwide, 1.5 million subprime home loans are in foreclosure.

There is no doubt the flood of subprime lending locally is contributing to a surge in Northwest Indiana foreclosures, according to Burton Padove, a Munster lawyer who represents private clients and others pro bono (that is, for free) in foreclosure cases.

Padove said loan brokers often sell people on subprime loans by pitching them as a lower-cost alternative to continuing to pay off credit-card bills at high interest rates. But borrowers end up struggling to make the payments on the subprime loans as well.

So instead of declaring bankruptcy on unsecured credit-card debt, borrowers end up losing their homes, Padove said.

In Lake County, foreclosures soared to 3,960 last year -- the highest level in 13 years. Foreclosures in Porter County reached a 10-year high of 603 last year.

"I think America has been sold a bill of goods -- that this is the way to get rid of credit card debt," Padove said.

"It's an absolute tragedy."

Lenders defend practices in court

Although foreclosures are happening everywhere, the havoc is greatest in minority communities, which historically have suffered discrimination in lending.

"Because of historic discrimination by banks, minority consumers had been shut out of mainstream banking," said Hudson, of the Center for Responsible Lending. "That left them vulnerable."

The NAACP has brought lawsuits against a long list of subprime lenders for predatory lending to black homeowners. Among those are at least six that, in 2007, were among the top 10 subprime lenders in Lake and Porter counties. Those were Wells Fargo, Countrywide, Option One Mortgage, CitiGroup, First Franklin and HSBC for lending by its Beneficial subsidiary.

In a separate action, the city of Baltimore has sued Wells Fargo, alleging the financial giant preyed on borrowers in poor neighborhoods.

Wells Fargo vigorously denies those allegations. In an e-mailed statement to The Times, Wells Fargo said the Baltimore lawsuit "absolutely lacks merit."

"We have worked extremely hard to make home ownership possible for more African-American borrowers and for all customer segments, and we have done so fairly and responsibly," the statement read.

CitiGroup did not respond to a Times request for comment.

But you don't have to sit in court or read banks' defenses to find out about the effects of subprime lending, Hudson, of the Center for Responsible Lending, said.

The consequences of the lending debacle can easily be seen in middle-class neighborhoods in Gary and other heavily minority areas just by driving down streets. The long grass and weeds, windows with no curtains and yellow eviction notices taped to windows are sure signs the crisis has arrived.