ARTICLE
12 August 2022

CFPB And DOJ Reach $24.4 Settlement With Mortgage Originator For Alleged Lending Discrimination

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Goodwin Procter LLP

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On July 27, 2022, the Consumer Financial Protection Bureau (CFPB) and U.S. Department of Justice (DOJ) announced that they reached a settlement with a nonbank residential mortgage lender to resolve...
United States Pennsylvania Finance and Banking

On July 27, 2022, the Consumer Financial Protection Bureau (CFPB) and U.S. Department of Justice (DOJ) announced that they reached a settlement with a nonbank residential mortgage lender to resolve allegations of race-based lending discrimination in violation of the Fair Housing Act (FHA), 42 U.S.C. §§ 3601-3619; the Equal Credit Opportunity Act (ECOA), 15 U.S.C. §§ 1691-1691f, and its implementing regulation (Regulation B), 12 C.F.R. pt. 1002; and the Consumer Financial Protection Act (CFPA), 12 U.S.C. § 5536(a)(1)(A).

According to the agencies' complaint, the lender allegedly engaged in unlawful redlining when it "avoided providing home loans and other home mortgage services in majority-minority neighborhoods in the Philadelphia [Metropolitan Statistical Area (MSA)]." The lenders allegedly did so by locating all of its offices and loan officers in majority-white neighborhoods, concentrating its marketing efforts exclusively in majority-white neighborhoods, and distributing internal communications to its employees with racist language and messages about certain majority-minority neighborhoods.

If entered by the United States District Court for the Eastern District of Pennsylvania, the lender will pay $20.4 million towards various programs to assist with revitalization efforts in minority-majority neighborhoods located in the Philadelphia MSA, including a loan subsidy program, minority advertising and outreach, consumer education services, and community development partnerships. The proposed consent order also requires the lender to pay a $4 million civil penalty. As part of the settlement, the lender neither admits nor denies the allegations in the complaint.

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