DOJ fines lender $1.75 million for discriminatory redlining practices in Florida

A non-depository mortgage lender will pay $1.75 million to address discriminatory lending practices after a DOJ investigation revealed redlining in Florida communities.

On January 7, 2025, the United States Department of Justice (DOJ) announced a significant settlement with a non-depository mortgage lender, which has agreed to pay $1.75 million to address allegations of discriminatory lending practices, particularly redlining in predominantly Black and Hispanic communities.

Allegations and Legal Action

The DOJ’s lawsuit, filed in Florida’s Southern District, accused the lender of violating both the Fair Housing Act and the Equal Credit Opportunity Act.

According to the complaint, the lender failed to provide equal access to mortgage financing in neighborhoods with substantial Black and Hispanic populations, especially in the Miami-Fort Lauderdale-West Palm Beach Metropolitan Statistical Area (Miami MSA).

The DOJ highlighted that the lender chose to establish its offices mainly in areas with white residents and did not make significant efforts to reach out or expand its services in communities of color.

As a result, the number of mortgage applications originating from these neighborhoods was disproportionately low compared to similar institutions.

Settlement Terms and Corrective Measures

Should the court ratify the DOJ’s proposed consent order, the lender will be subject to a range of corrective measures, designed to reform its practices.

Here are the key components of the settlement:

  • Community Credit Needs Assessment: The lender is required to evaluate the credit requirements of residents living in majority-Black and Hispanic areas.

    This assessment will help tailor future loan products and marketing endeavors to better serve these communities.

  • Implementation of a Loan Subsidy Program: A dedicated fund of $1.75 million will be established to support a new initiative that offers reduced-rate loans for home purchases, refinancing, and home improvements, specifically targeting the needs of predominantly Black and Hispanic neighborhoods within the Miami MSA.
  • Fair Lending Practices Evaluation: A thorough review of the lender’s fair lending program will be conducted, with a particular emphasis on its responsibilities toward the Miami MSA’s predominantly Black and Hispanic communities.
  • Enhanced Training and Staffing Initiatives: The lender plans to ramp up fair lending training for its staff and to increase the number of personnel involved in these efforts by appointing a Director of Community Lending.
  • Expanded Marketing and Outreach Efforts: A physical presence will be established in a majority-Black and Hispanic neighborhood within Miami-Dade County.

    Additionally, the lender will translate its website into Spanish and require loan officers to actively promote their services within these communities.

  • Community Engagement Initiatives: The lender is committed to hosting four outreach events and six financial education seminars each year, collaborating with local organizations to enhance credit accessibility for residents of predominantly Black and Hispanic areas in the Miami MSA.

Broader Implications

This settlement reflects a broader trend in recent months, as both the Consumer Financial Protection Bureau (CFPB) and the DOJ have addressed issues of redlining, marking this case as the third of its kind involving a non-depository lender.

With a change in administration anticipated soon, further actions are expected as regulators continue to close out ongoing fair lending investigations.

Source: Natlawreview