Mortgage Daily Logo
mortgage news from industry experts

New York Lender Reaches Disparate Impact Settlement

A New York firm that was sued earlier this year by the government over practices that allegedly produced higher mortgage rates for minority borrowers has admitted that its practices had a disparate impact and agreed to pay more than $3 million to settle the charges.

The U.S. Attorney in Manhattan, N.Y., filed a federal lawsuit in April against GFI Mortgage Bankers Inc. alleging violations of the Fair Housing Act and the Equal Credit Opportunity Act. The action was prompted by a 2010 referral from the Department of Housing and Urban Development to the Department of Justice’s Civil Rights Division.

The Manhattan-based lender allegedly put black and Hispanic borrowers into more expensive loans than similarly situated white borrowers. The discrimination allegedly occurred from 2005 until 2009.

GFI filed a motion to dismiss the case, and the Justice Department filed an opposition to the motion. But the court was skeptical of GFI’s argument that federal law allows lenders to price loans in a manner that produces such disparate impact on minority borrowers, according to the government.

On Tuesday, the Justice Department announced that a settlement has been reached with GFI for $3,555,000. The settlement includes $3.5 million in compensation to around 600 minority borrowers and a $55,000 civil penalty allowed by the Fair Housing Act.

GFI is required to develop and implement new policies that limit loan originator pricing discretion, document loan pricing decisions and monitor pricing disparities based on race and national origin that are not justified by objective borrower credit characteristics or loan features.

The lender reportedly admitted that it charged minorities more without being able to justify the pricing based on objective borrower characteristics or loan product features. In fact, originators were provided with financial incentives for charging higher rates — a common pre-bubble practice.

Popular posts

How Long Does It Take to Refinance a Mortgage
How Long Does It Take to Refinance a Mortgage

So, you’re interested in refinancing your mortgage. Maybe you want some extra capital to do that home project you’ve always dreamed of, interest rates are nearing record lows, or you want to start consolidating debt. Regardless of the motivation behind the refinance,...

How Does Refinancing a Mortgage Work
How Does Refinancing a Mortgage Work

A home purchase is considered an investment, and a robust one at that. Savvy owners are constantly looking for new ways to reduce debt, save money, pay less in interest, and ultimately build equity. Refinancing is one way to leverage your investment and do just that....

What Does It Mean to Refinance Your Home
What Does It Mean to Refinance Your Home

You can think of refinancing your mortgage as a debt redo. Essentially, you’ll swap out the existing loan for a new one - ideally with better terms and conditions. Only this time it could help you save money on high mortgage payments, rather than just borrow it....

Setting up the Utilities in My New House
Setting up the Utilities in My New House

All the tedious, time-consuming home closing documents have been signed, sealed, and delivered. Your belongings are packed into what seems like a million boxes and you have a solid plan to haul all your existing furniture to the new place. Just as your boxes and...

When Is My First Mortgage Payment Due?
When Is My First Mortgage Payment Due?

Navigating your way through a brand new mortgage loan can be a difficult task, especially for first time homeowners. After handing over a large sum of money for the down payment and closing costs, it’s important to pay attention to the timing of your first mortgage...


Don’t worry, we don’t spam

calculate your monthly mortgage payment

Related Topics

Helpful Links

Daily mortgage rate trends

Best mortgage lenders

First-time homebuyers programs by state

Loan limits by state

Types of mortgages

APR vs interest rate

Understanding PMI

Related Posts