RATA
U.S. Justice Department and North Carolina Attorney General Reach Settlement to Resolve Allegations of Auto Lending Discrimination
Settlement Requires Substantial Improvements to Dealerships' Policies and Provides $225,000 in Relief to Affected Customers
The U.S. Department of Justice Civil Rights Division, the U.S. Attorney's Office for the Western District of North Carolina and the North Carolina Department of Justice today announced a settlement of the federal government's first-ever discrimination lawsuit involving "buy here, pay here" auto lending. The settlement, which is subject to court approval, was filed today in the U.S. District Court for the Western District of North Carolina.
| Institution | Regulator(s) | Violation | Penalty | Period covered | HMDA/fair-lending data field involved |
|---|---|---|---|---|---|
| Auto Fare Inc. and Southeastern Auto Corp. | U.S. Department of Justice Civil Rights Division; U.S. Attorney's Office for the Western District of North Carolina; North Carolina Department of Justice | Pattern or practice of "reverse redlining" by intentionally targeting African-American customers for unfair and predatory credit practices in financing used car purchases, in violation of the federal Equal Credit Opportunity Act; also alleged violation of North Carolina's Unfair and Deceptive Trade Practices Act | $225,000 settlement fund to compensate victims of past discriminatory and predatory lending | — | Disproportionately high sales prices, down payments, and interest rates compared to other subprime used-car dealers |
CFPB Issues Proposal To Facilitate Access To Credit In Rural And Underserved Areas
WASHINGTON, D.C. – The Consumer Financial Protection Bureau (CFPB) today proposed several changes to its mortgage rules to facilitate responsible lending by small creditors, particularly in rural and underserved areas. If finalized, the proposal issued today would increase the number of financial institutions able to offer certain types of mortgages in rural and underserved areas, and help small creditors adjust their business practices to comply with the new rules. "Responsible lending by community banks and credit unions did not cause the financial crisis, and our mortgage rules reflect the fact that small institutions play a vital role in many communities," said CFPB Director Richard Cordray. "Today's proposal will help consumers in rural or underserved areas access the mortgage…
Justice Department Reaches Settlement Agreement With First United Bank Over Allegations of Discrimination on the Basis of National Origin
The Justice Department announced today that First United Bank, of Dimmitt, Texas, will maintain uniform pricing policies, conduct employee training and pay $140,000 as part of a settlement to resolve allegations that it engaged in a pattern or practice of discrimination on the basis of national origin.
| Institution | Regulator(s) | Violation | Penalty | Period covered | HMDA/fair-lending data field involved |
|---|---|---|---|---|---|
| First United Bank | Justice Department (Civil Rights Division); referred by the FDIC | Pattern or practice of discrimination on the basis of national origin — charging higher prices on unsecured consumer loans made to Hispanic borrowers, in violation of the Equal Credit Opportunity Act (ECOA) | $140,000 total, to compensate hundreds of victims of discrimination | — | National origin discrimination in loan pricing (unsecured consumer loans) |
The settlement, which is subject to court approval, was filed in conjunction with the Justice Department's complaint in the U.S. District Court for the Northern District of Texas. The complaint alleges that First United Bank charged higher prices on unsecured consumer loans made to Hispanic borrowers in violation of the Equal Credit Opportunity Act (ECOA).
CFPB Takes Action Against Franklin Loan Corporation for Steering Consumers into Costlier Mortgages
WASHINGTON, D.C. — Today, the Consumer Financial Protection Bureau (CFPB) ordered a California mortgage lender, Franklin Loan Corporation, to pay $730,000 for giving its employees illegal bonuses for steering consumers into loans with higher interest rates. The Bureau has asked a federal district court to approve a consent order requiring the company to end its illegal compensation system and refund the consumers it harmed.
| Institution | Regulator(s) | Violation | Penalty | Period covered | HMDA/fair-lending data field involved |
|---|---|---|---|---|---|
| Franklin Loan Corporation | Consumer Financial Protection Bureau (CFPB) | Paid loan officers bonuses tied to the interest rates of loans they closed, violating the Federal Reserve Board's Loan Originator Compensation Rule | $730,000 in redress to affected consumers (no civil penalty sought, based on Franklin's financial condition and the Bureau's desire to maximize relief to consumers) | June 2011 to October 2013 | Loan officer compensation / steering (interest rate-based bonuses) |
CFPB and DOJ Take Action Against National City Bank for Discriminatory Mortgage Pricing
WASHINGTON, D.C. — Today, the Consumer Financial Protection Bureau (CFPB) and the Department of Justice (DOJ) filed a joint complaint against National City Bank for charging higher prices on mortgage loans to African-American and Hispanic borrowers than similarly creditworthy white borrowers between the years 2002 and 2008. The agencies also filed a proposed order to settle the complaint that requires National City Bank, through its successor PNC Bank, to pay $35 million in restitution to harmed African-American and Hispanic borrowers.
| Institution | Regulator(s) | Violation | Penalty | Period covered | HMDA/fair-lending data field involved |
|---|---|---|---|---|---|
| National City Bank | CFPB and DOJ | Charging higher mortgage prices to African-American and Hispanic borrowers than similarly creditworthy white borrowers, in violation of the ECOA (and, per DOJ, the Fair Housing Act) | $35 million to a settlement fund for restitution to harmed African-American and Hispanic borrowers | 2002–2008 | Discretionary pricing and compensation policies (loan officer/broker discretion over rates and fees) |
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