The Department of Justice announced the second largest fair lending settlement—$175 million—in the Department’s history. The DOJ investigated defendant’s alleged deceptive conduct amidst allegations that it had engaged in racial discrimination by steering African American and Hispanic borrowers into higher-cost subprime loan products, while similarly qualified white borrowers received prime loans. In its complaint, the DOJ alleged that defendant collected higher fees from its non-white borrowers as a result of this practice. Under the terms of the settlement, the bank will pay $125 million to compensate borrowers who were victims of racial discrimination, as well as provide $50 million in direct down payment assistance to borrowers in communities around the country where the DOJ has identified large numbers of discrimination victims and which were hard hit by the housing crisis.
Alert July 24, 2012