Bank Settles Allegations YSPs Higher for Hispanics

The bank also consented to an order for $950,000 in restitution and an order to pay a civil money penalty of $50,000. It had already set aside $950,000 for settlement expenses.

First Mariner said the FDIC accused it of charging higher interest rates on loans to Hispanics, blacks and women. The allegations primarily relate to Hispanic borrowers in Northern Virginia.

Between 2005 and 2007, the Baltimore-based institution is accused of violating the Equal Credit Opportunity Act and the Fair Housing Act by increasing rates on minority loans so it could earn higher YSP income. YSPs for whites, however, were allegedly lower.

In addition, First Mariner allegedly violated Section 5 of the Federal Trade Commission Act during 2006 and 2007 by using misleading disclosures on option adjustable-rate mortgages. It agreed to stop offering option ARMs.

The loans at issue appear to be tied to First Mariner’s wholesale lending operation, which it exited in 2007. The bank sued former broker East West Mortgage Company Inc. last year over $5.9 million in fraudulent mortgages and took a $5 million charge primarily on losses tied to properties in Northern Virginia.

As part of its agreement with the FDIC, First Mariner must cease and desist from further violations. It also must develop and implement policies and procedures to maintain compliance, adequate disclosures and auditing oversight.

Additionally, the company said it must “conduct or sponsor quarterly financial literacy and education courses where it provides residential mortgage loans.”

This is the second recent case involving YSPs on mortgages to Hispanics.

Golden Empire Mortgage Inc. was sued last week by the Federal Trade Commission over allegations that its originators charged higher YSPs to Hispanic borrowers.