Consumer Finance Insights
February 3, 2016

HUD Settles FHA Discrimination Claims Against Tennessee Bank for $1.9 Million

On February 1, 2016, the U.S. Department of Housing and Urban Development (HUD) announced a $1.9 million settlement with a Tennessee bank for alleged violations of the Fair Housing Act (FHA).  According to a complaint filed with HUD, the bank “denied loan applications submitted by African American and Hispanic borrowers at higher rates than applications submitted by non-Hispanic white borrowers” in Chattanooga, Knoxville, Memphis, and Nashville (the Affected Areas).  The bank strongly “denie[d] any allegation that it engaged in discriminatory lending,” but agreed to the settlement “without admitting fault, liability, or responsibility” and thereby avoided “an evidentiary hearing or other judicial process[es].”  Under the settlement, the bank agreed to pay $25,000 to the National Community Reinvestment Coalition as well as $1.875 million in consumer relief, in the form of a Subsidy Fund for interest rate reduction, home repair funds, and foreclosure-prevention funds, to minority communities in the Affected Areas.  The bank also agreed to monitoring by HUD to “conduct reviews of [the bank’s] operations and facilities relevant to this Agreement to ensure compliance with this Agreement.”