Alert June 12, 2012

Bank Settles Fair Lending Suit with DOJ

The DOJ has settled its on-going dispute with a large mortgage lender regarding alleged discriminatory practices in the pricing of its loan products offered to African-American and Hispanic home mortgage borrowers. The settlement, set forth in the terms of a Consent Decree entered the same day that the DOJ formally filed its complaint, provides for a number of key provisions and mechanisms including the payment of $21 million into a settlement fund to compensate victims of discriminatory lending practices, establishing a fair lending auditing and monitoring program, and establishing an Equal Credit Opportunity Training Program. Significantly, the Consent Decree notes the mortgage lender’s cooperation with the DOJ’s investigation, and its prior implementation of policies and procedures designed to ensure compliance with federal civil rights law in the operation of its retail lending channel, a conciliatory approach that may have lessened the terms of the eventual settlement. The Consent Decree also provides for entry of a “General Nondiscrimination Injunction” and the creation of a monitoring process whereby the mortgage lender will review its lending practices, report results to the DOJ on a regular basis, and, where necessary, make its lending records available to the DOJ for inspection. Click here to view a copy of the Consent Decree.