The Justice Department announced Tuesday that The Mortgage Firm, Inc. agreed to pay $1.75 million to resolve allegations that it engaged in a pattern or practice of lending discrimination by redlining predominantly Black and Hispanic neighbourhoods in the Miami-Fort Lauderdale-West Palm Beach, Florida, Metropolitan Statistical Area.
Redlining is an illegal practice by which lenders avoid providing credit services to individuals living in communities of colour because of the race, colour or national origin of residents in those communities.
Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division noted that by denying predominantly Black and Hispanic neighbourhoods in the greater Miami area access to credit, The Mortgage Firm violated the law, denied communities equal access to credit and exacerbated the racial wealth gap.
“Our efforts to protect everyone’s civil rights is never ending,” said U.S. Attorney Markenzy Lapointe for the Southern District of Florida. “The unlawful practice of lending discrimination is not merely a thing of the past, but persists in this country, to include within the Southern District of Florida.”
The Mortgage Firm is a non-depository mortgage company headquartered in Altamonte Springs, Florida. The complaint, filed Tuesday in the Southern District of Florida, alleges that The Mortgage Firm violated the Fair Housing Act and Equal Credit Opportunity Act by failing to provide equal access to mortgage lending services to the majority- and high-Black and Hispanic neighbourhoods in the Miami MSA and discouraging people seeking credit in those communities from obtaining home loans.
The Mortgage Firm located its offices in predominantly white neighbourhoods and took inadequate steps to market to and develop referral networks within Black and Hispanic neighbourhoods. As a result, The Mortgage Firm generated mortgage loan applications in predominantly Black and Hispanic neighbourhoods in the Miami MSA at rates far below peer institutions.
The proposed consent order, which awaits court approval, would require The Mortgage Firm to conduct a Community Credit Needs Assessment to identify the credit needs of residents of predominantly Black and Hispanic neighbourhoods in the Miami MSA and to consider the results of that assessment to develop future loan programs, marketing campaigns and outreach efforts; provide $1.75 million for a loan subsidy program to offer affordable home purchase, refinance and home improvement loans in predominantly Black and Hispanic neighbourhoods in the Miami MSA. The program may provide lower interest rates, down payment assistance, closing cost assistance or payment of initial mortgage insurance premiums and conduct a detailed assessment of its fair lending program in the Miami MSA, specifically regarding fair lending obligations and lending in predominantly Black and Hispanic neighbourhoods, among other things.
The Justice Department opened this investigation into The Mortgage Firm’s lending practices after receiving a referral from the Consumer Financial Protection Bureau. This settlement marks the Justice Department’s 16th redlining settlement under the Combating Redlining Initiative and the third non-depository institution to reach a redlining settlement with the department.
Non-depository lenders, not traditional banks and do not provide typical banking services, engage in mortgage lending and now make the majority of mortgages in this country. Under the Combating Redlining Initiative, the department has secured over $153 million in relief for communities of colour that have been the victims of lending discrimination. This historic amount of relief is expected to generate over $1 billion in investment to address unequal access to credit in communities of colour across the country.
