• DOJ Fair Lending Consent Order
  • April 18, 2017 | Author: Christopher R. Rahl
  • Law Firm: Gordon Feinblatt LLC - Baltimore Office
  • On January 18, 2017, a major bank entered into a consent order regarding alleged fair lending violations. The consent order is the result of an investigation by the United States Department of Justice (DOJ) into the bank's wholesale mortgage purchase activities from 2006 through 2009. The DOJ faulted the bank for allowing mortgage brokers to exercise pricing discretion that the DOJ alleged resulted in certain minority borrowers obtaining loans at higher interest rates than non-minority borrowers. The consent order is interesting in that it notes that the DOJ's data modeling "projected" that certain minority borrowers obtained higher interest rates, but no specific pricing differences were cited. The bank was faulted for not monitoring its purchased mortgage loans to identify the "projected" pricing disparities and take corrective action. The bank agreed to pay just over $54 million, the majority of which is to be used to make refunds to impacted borrowers (and a $55,000 civil penalty). While the consent order covers conduct from 2006 through 2009, it is a reminder to all lenders who purchase loans to be mindful of fair lending responsibilities - especially where third parties have pricing discretion. Please contact Christopher Rahl to discuss this topic.