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

by Rafael DeLeon, Ncontracts

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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