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GreenPoint Brokers Targeted by New York

HCI Mortgage, Consumer One Mortgage settle with attorney general

January 5, 2009

By MortgageDaily.com staff


Two New York mortgage brokers have settled charges that they charged minorities thousands of dollars more in fees, while a third broker faces a lawsuit by the state and more brokers face investigations. The actions were prompted by an investigation into defunct wholesaler GreenPoint Mortgage Funding Inc.

HCI Mortgage and Consumer One Mortgage have entered an agreement with New York's attorney general, a press release today said. Between the two companies, there are more than 20 branches throughout the state.

The two brokers will pay $665,000 in restitution to around 455 black and Hispanic borrowers, according to the announcement. The also agreed to establish a standard fee schedule, monitor pricing to minorities and report lending details to the state.

Both brokers are accused of charging minorities higher fees than similarly-situated White borrowers.

The attorney general conducted an investigation with the New York State Department of Banking into discriminatory practices by mortgage brokers. The investigation was triggered by the state's investigation into GreenPoint Mortgage Funding Inc. after it found that Home Mortgage Disclosure Act data indicated discrimination had occurred on GreenPoint mortgages. GreenPoint, which was shut down by parent Capital One in August 2007, settled the charges in July for $1 million.

Statistical analyses conducted on loans originated by HCI found that black borrowers were charged around 46 percent more than similarly situated whites, which worked out to around $2,260. Hispanic borrowers saw fees that were an average of 55 percent higher, which worked out to $2,280.

"These customers were charged significantly higher fees for no reason other than being a minority -- something that is explicitly against the law in New York State," Attorney General Andrew Cuomo said in the statement.

In addition, the attorney general has filed a lawsuit in federal district court against U.S. Capital Funding LLC. A state investigation also found discriminatory practices at U.S. Capital, but the company refused to provide restitution to more than 100 minority borrowers -- prompting the lawsuit by the attorney general.

U.S. Capital reportedly brokered 300 loans between January 2006 and July 2007, including around 100 mortgages for black and Hispanic borrowers. Minorities were allegedly charged 58 percent more than whites, costing them an average of $3,500 each.

"HCI Mortgage, Consumer One, and U.S. Capital Funding all did substantial business with GreenPoint," the statement said. "The office is continuing its investigation into potential discriminatory pricing by other mortgage brokers."

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