The FTC reached a settlement with Gateway Funding Diversified Mortgage Services, L.P., and its general partner, Gateway Funding Inc., concerning an FTC complaint alleging violations of the Equal Credit Opportunity Act. Gateway allegedly gave mortgage loan officers nearly complete discretion to charge “overages,” but failed to monitor whether African-American and Hispanic borrowers were paying higher overages than non-Hispanic white borrowers. According to the complaint, this lack of oversight “resulted in African-American and Hispanic applicants being charged higher overages because of their race or ethnicity,” and the “disparities in overage are substantial, statistically significant and cannot be explained by factors related to underwriting risk or credit characteristics of the applicants.” The settlement imposes a $2.9 million judgment, all but $200,000 of which is suspended due to the defendants' inability to pay. Click here for the FTC's press release and links to related information such as the complaint and order.
Alert December 30, 2008