On January 7, 2025, the United States Department of Justice (the “DOJ”) announced that a non-depository mortgage lender has agreed to pay $1.75 million in connection with allegations that it engaged in a pattern or practice of lending discrimination by redlining predominantly Black and Hispanic neighborhoods.
The DOJ filed its underlying complaint in the Southern District of Florida alleging that the lender violated the Fair Housing Act and Equal Credit Opportunity Act by failing to equitably provide access to mortgage lending services to majority-Black and Hispanic neighborhoods and high-Black and Hispanic neighborhoods in the Miami-Fort Lauderdale-West Palm Beach, Florida, Metropolitan Statistical Area (“Miami MSA”). According to the DOJ, the lender set up offices in predominantly white neighborhoods and made insufficient efforts to market their services or develop their network in Black or Hispanic neighborhoods, which resulted in the company generating mortgage loan applications within such neighborhoods at rates far below peer institutions.
The DOJ’s proposed consent order, if entered by the court, will require the lender to take certain measures to rectify its practices, including:
- Community Credit Needs Assessment. Conducting an assessment to identify the credit needs of residents in predominantly Black and Hispanic neighborhoods, using the results to develop future loan programs and marketing campaigns.
- Loan Subsidy Program. Providing $1.75 million for a loan subsidy program offering affordable home purchase, refinance, and home improvement loans in predominantly Black and Hispanic neighborhoods in the Miami MSA.
- Fair Lending Program Assessment. Conducting a detailed assessment of its fair lending program, focusing on fair lending obligations to predominantly Black and Hispanic neighborhoods in the Miami MSA.
- Enhanced Training and Staffing. Enhancing fair lending training and staffing, including maintaining a Director of Community Lending.
- Outreach and Advertising Expansion. Maintaining an office location in a majority-Black and Hispanic neighborhood in Miami-Dade County, translating its website into Spanish, and requiring loan officers to engage in marketing to these neighborhoods.
- Community Engagement. Providing four outreach events and six financial education seminars per year, partnering with community organizations to increase credit access in predominantly Black and Hispanic neighborhoods in the Miami MSA.
Putting it into Practice: This settlement follows a series of other recent redlining settlements by the CFPB and DOJ (previously discussed here, here, and here). It is also the third involving a non-depository institution. With the upcoming change in administration this month, regulators may remain eager to pursue settlements of pending fair lending investigations.