The Department of Justice announced that its investigation into fair lending violations, which commenced in 2007 with the Department of Housing and Urban Development, has concluded in a $3.5 million settlement. The DOJ alleged that the mortgage firm engaged in a pattern and practice of discrimination by pricing residential mortgage loans for qualified African American and Latino borrowers higher than similarly-qualified non-Hispanic white borrowers. In particular, African American and Hispanic borrowers were charged higher interest rates—ranging between 19 and 41 basis points higher for African Americans borrowers and 20 and 23 basis points higher for Hispanic borrowers. Under the terms of the settlement, borrowers are entitled to compensation and the mortgage firm is required to pay $55,000 in civil money penalties—the maximum under the Fair Housing Act. Moreover, the mortgage firm is required to develop and implement new policies that limit the pricing discretion of its loan officers, require documentation of loan pricing decisions, and monitor loan prices for race and national origin disparities. This settlement is part of the DOJ’s increasing focus on lending discrimination (see July 24, 2012 Alert).
Alert September 05, 2012