Saw today that the National Community Reinvestment Coalition is suing NovaStar, claiming the subprime lending giant engaged in redlining minorities.

The lawsuit by the National Community Reinvestment Coalition, a Washington, D.C. nonprofit, accused Kansas City, Missouri-based NovaStar of policies often known as “redlining.” It said NovaStar denies all loans for applications to buy row houses in Baltimore. It said this results in discrimination against African-Americans and Hispanics. The group also said NovaStar believes it is “unacceptable” to make loans for properties located on Indian reservations and properties used for adult foster care.

Novastar’s lawyers, as would be expected, are denying the claims. What’s fascinating to me about this case is that it shows just how…well, there’s no other word than crazy….the consumer lobby has gotten. Perhaps this suit has merit, perhaps not, perhaps NovaStar was redlining, perhaps not. But this case is one of the few instances where anyone has tried using the Fair Housing Act to bring a civil suit against a lender for NOT making loans. (For those keeping score at home, the NCRC said in its press release that this is technically the first time the Housing Act has been used in this context for row houses and adult foster care facilities). I can’t help but find the irony in this case, given the great deal of press the Center for Responsible Lending — a different consumer lobby — has gotten for its work which alleges that the subprime industry engaged in racial targeting by MAKING subprime loans to minorities. Damned if you do, damned if you don’t, I guess.