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Record settlement in mortgage discrimination case

PARAMUS, N.J. – Sept. 25, 2015 – A settlement of alleged discriminatory lending practices is the largest ever of its kind and just the latest in a series of similar legal actions.
Among companies to recently settle charges of lending discrimination are National City Bank, Provident Funding Associates LP and RPM Mortgage Inc.
Even more recently, Evans Bancorp Inc. agreed to a settlement with the New York Attorney General’s Office, while three federal lawsuits filed by the city of Miami against Bank of America Corp., Citigroup Inc. and Wells Fargo & Co. were revived by a federal appeals court.
The latest action is against Hudson City Savings Bank, FSB, a $35 billion financial institution.
An announcement Thursday from the Consumer Financial Protection Bureau (CFPB) said that the Paramus, New Jersey-based company didn’t provide the same access to home lending for consumers in black and Hispanic neighborhoods as it did for their counterparts in white neighborhoods.
As a result, the CFPB and Department of Justice claim that the Equal Credit Opportunity Act and Fair Housing Act were violated by the bank.
The alleged discrimination occurred from 2009 through 2013 in Connecticut, New Jersey, New York and Pennsylvania.
“The bank located branches and loan officers, selected mortgage brokers, and marketed products to avoid and thereby discourage prospective borrowers in predominantly black and Hispanic communities,” the statement said.
The alleged actions were uncovered during a CFPB examination that started in March 2014. The CFPB and Justice Department then jointly conducted an investigation.
A consent order reached between CFPB and Hudson City will require that the bank pay $25 million in direct loan subsidies to qualified borrowers in the affected communities, spend $2.25 million on community programs and outreach, and pay a $5.5 million penalty.
“This represents the largest redlining settlement in history to provide such direct subsidies,” the CFPB stated.
The order also requires Hudson City to expand assessment areas to include majority-black-and-Hispanic communities, assess the credit needs of majority-black-and-Hispanic communities and develop a fair lending compliance and training plan.
The consent order is subject to court approval.
© 2015 Mortgage Daily. Distributed by Tribune Content Agency, LLC.
Source: Florida Realtors Feed

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