Fair Lending
Justice Department and CFPB Reach Settlement with Provident Funding Associates to Resolve Allegations of Mortgage Lending Discrimination
Settlement Provides $9 Million in Compensation to African-American and Hispanic Borrowers
The Justice Department and Consumer Financial Protection Bureau (Bureau) filed a consent order today to resolve allegations that Provident Funding Associates (Provident) engaged in a pattern or practice of discrimination that increased loan prices for African-American and Hispanic borrowers who obtained residential mortgages between 2006 and 2011 from Provident's nationwide network of mortgage brokers.
| Institution | Regulator(s) | Violation | Penalty | Period covered | HMDA/fair-lending data field involved |
|---|---|---|---|---|---|
| Provident Funding Associates | Justice Department; Consumer Financial Protection Bureau | Pattern or practice of discrimination that increased loan prices for African-American and Hispanic borrowers, in violation of the Fair Housing Act and Equal Credit Opportunity Act (ECOA) | $9 million into a fund for the benefit of victims of the alleged discrimination | 2006 to 2011 | — |
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 |
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) |
- California's New Fair Lending Exam Law: What State-Chartered Banks, Credit Unions and Mortgage Licensees Should Have Ready
- How to Benchmark Your CRA and HMDA Lending Against Peer Data
- HMDA vs CRA vs Section 1071: What Each Rule Collects and Who Has to File
- Fair Lending Regression Analysis: What It Controls For and How to Explain a Pricing Disparity
- 2026 HMDA Data: Your Filing Checklist for the March 1, 2027 Deadline
- HMDA Plus: What It Actually Changed in the LAR Workflow
- How to Fix the 10 Most Common HMDA Edit Check Errors
- CFPB and DOJ Settle Redlining Claims Against Non-Depository Mortgage Companies Before Change in Administration
- How to Evaluate Fair Lending and CRA Software: What to Test Before You Sign
- What a Fair Lending Exam Actually Asks For
- Fair Servicing: What Examiners Test in Servicing Data, and How to Test It First
- What Actually Counts as a Small Business Loan Under Section 1071
- Section 1071 in 2026: What Lenders Need to Know About Small Business Lending Data
