CFPB, DOJ Propose $22 Million Penalty Against Nonbank Mortgage Lender for Illegal Redlining

On July 27, the CFPB and DOJ proposed a settlement with a nonbank mortgage lender for its discriminatory “redlining” lending practices in opposition to minority households dwelling within the better Philadelphia space. If accredited by the courtroom, the mortgage lender could be required to pay greater than $22 million in civil penalties, and could be the CFPB’s first nonbank mortgage redlining settlement.

In keeping with the complaint, the mortgage lender violated the Equal credit score alternative Act, Shopper Monetary Safety Act, and the Truthful Housing Act by allegedly:

  • distributing racist or discriminatory messages about sure neighborhoods particularly associated to actual property property areas and value determinations;

  • avoiding sending its mortgage officers to neighborhoods with predominately minority populations; and

  • discouraging and ignoring minority mortgage candidates in its advertising campaigns and promoting efforts.

The proposed order would require the mortgage lender, amongst different issues, to pay (i) $18.4 million right into a mortgage subsidy program to extend non-discriminatory entry to credit score; $4 million to the CFPB’s victims’ aid fund, and (ii) $2 million to fund promoting to generate functions in redlined areas. Along with the CFPB and DOJ’s motion in opposition to the mortgage lender itself, the states of Pennsylvania, New Jersey, and Delaware have entered into concurrent agreements with the mortgage lender’s actual property companies affiliate.

Placing It Into Follow: Not too long ago, federal regulators have elevated their efforts in combating unlawful redlining lending practices. Final fall, the DOJ introduced its Combatting Redlining Initiative, which promised to dedicate better assets and rising coordination with federal monetary regulatory companies and state Attorneys normal to fight modern-day redlining. In gentle of this current settlement, mortgage lenders and their associates ought to be certain that their lending practices don’t run afoul of federal rules, particularly these targeted on discriminatory conduct.

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