CFPB and DOJ Reach $24.4 Million Settlement with Mortgage Originator for Alleged Lending Discrimination

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 Un​ited 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.