Consumer Finance Insights
January 24, 2017

DOJ Settles Mortgage Discrimination Lawsuit Against National Bank for $54 Million

On January 20, the  U.S. Attorney’s Office for the Southern District of New York (USAO) announced that it had settled a recently-filed lawsuit against a national bank, resolving allegations of mortgage discrimination.

As previously covered by Enforcement Watch, the government alleged that from 2006 to 2009, the bank charged minority borrowers higher rates and fees on home loans in violation of the Fair Housing Act and the Equal Credit Opportunity Act.

According to the consent order, the parties agreed that between 2006 and 2009, the bank originated approximately 360,000 wholesale mortgage loans, 40,000 of which were made to African-American borrowers and 60,000 of which were made to Hispanic borrowers.  The consent order alleged that the government’s statistical model projected that thousands of minority borrowers paid higher loan rates and larger fees than non-minority borrowers entering into the same loan type.

The bank agreed to pay a total of $54,300,000, minus a credit for a $930,000 payment made in connection with a related class action, and a $55,000 civil penalty.  The approximately $53 million remaining will be distributed to affected consumers.