In what is apparently the first legal action of its kind, an association of community-based organizations has filed a federal civil rights complaint against two of the three largest Wall Street ratings agencies, charging that their inflated ratings on subprime mortgage bonds disproportionately caused financial harm to African-American and Latino homebuyers across the country.

The complaint, filed by the National Community Reinvestment Coalition, alleges that Moody's Investor Services and Fitch Ratings enriched themselves by assigning high ratings to bonds backed by mortgages ''that were designed to fail'' because of ``unfair payment terms and insufficient borrower income levels.''

The agencies ''knew or should have known'' that subprime loans disproportionately were marketed to minority consumers -- a process known as ''reverse redlining'' -- and that those borrowers would ultimately default and go into foreclosure at high rates, according to the complaint.

Fitch Managing Director David Weinfurter said NCRC's filing ''is fully without merit, and Fitch intends to defend itself vigorously.'' Moody's had no immediate comment.

DISPROPORTIONATE

The filing cites multiple studies that found that black and Hispanic homebuyers received a disproportionate share of subprime loans during the housing boom years. A Federal Reserve study in 2006 estimated that 45 percent of mortgages extended to Latinos and 55 percent of loans to African-Americans were subprime -- a utilization rate ``three to four times that of non-Hispanic whites.''

Because the loans themselves often came with terms that increased borrowers' probability of default -- upfront teaser rates followed by unaffordable reset payment adjustments, no required documentation of applicants' incomes or assets, plus hefty prepayment penalties -- African-Americans with subprime mortgages are projected to lose between $71 billion and $92 billion through foreclosures, while Latinos are projected to lose between $75 billion and $98 billion, according to one study cited in the complaint.

''Had subprime loans been distributed equitably,'' the complaint estimates, ``losses for whites would be 44.5 percent higher and losses for people of color would be about 24 percent lower.''

A third rating agency with heavy involvement in the subprime boom, Standard & Poor's Corp., was not named in the complaint but has been ''in discussions'' with NCRC, according to David Berenbaum, the group's executive vice president. If the discussions with S&P prove ''unsatisfactory,'' he said, the company could be the subject of a separate action.

NCRC filed its complaint with the Department of Housing and Urban Development's fair housing and equal opportunity unit. After a review, the department could either dismiss the allegations or refer the case to the Justice Department for litigation next year. If HUD fails to respond adequately, NCRC says it may file a federal civil lawsuit.

The civil rights complaint is the latest in a series of lawsuits, regulatory investigations and congressional criticism of the rating agencies' roles and conduct during the mortgage bond heyday years of 2003-05. In dollar terms, subprime and so-called ''Alt-A'' no-doc loans accounted for 32 percent of all mortgage originations in 2005. Their share had been only 10 percent just two years before. Virtually all of those high-risk loans were sold to Wall Street firms for inclusion in complex bond structures that were resold -- often in bits and pieces -- to pension funds and financial institutions.

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