DOJ & CFPB follow up on promise for “vigorous” redlining enforcement with $24 million mortgage company settlement

Last fall the Justice Department (DOJ) promised it would “spare no resource” to ensure “vigorous” fair lending enforcement as part of its Combatting Redlining Initiative 

Now a Delaware-based mortgage company has settled a joint DOJ and Consumer Financial Protection Bureau (CFPB) redlining suit for $24.4 million—the second largest redlining settlement in DOJ history and the first against a non-bank lender. 

What went wrong? 

The CFPB and DOJ allege that the mortgage company, a subsidiary of Berkshire Hathaway, violated the Equal Credit Opportunity Act (ECOA) by actively avoided making loans and discouraging applicants in majority-minority neighborhoods in Philadelphia between at least 2015 and 2019. As a result, the company generated far fewer home loans and home loan applications from these neighborhoods than similarly situated lenders. (Peers generated two and a half times more applications and almost twice as many loans.) 

 

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