MortgageIT Inc., an indirect subsidiary of Deutsche Bank, will pay the Department of Housing and Urban Development $12 million to resolve lending discrimination claims that violated the Fair Housing Act.
This Conciliation Agreement is a result of a complaint HUD filed against MortgageIT alleging that the residential mortgage banking company discriminated against
HUD’s complaint, which is based on MortgageIT loan data from 2007 and 2008, claims the lender’s practices contributed to minority borrowers being charged Annual Percentage Rates that were eight to ten basis points higher than similarly-situated white borrowers. The complaint also asserts that minority applicants were denied loans more often than white applicants, happening 45% of the time to African-Americans and 35% to Hispanics.
Another highlight of the complaint alleged that African American borrowers were 65% and Hispanic borrowers were 72% more likely to receive higher priced loans than white counterparts. African American and Hispanic borrowers also allegedly paid, on average, $707 and $906 in fees, respectively.
“It’s creditworthiness and ability to pay that matter when you apply for a loan, not your race or where you come from,” says Bryan Greene, acting assistant secretary for fair housing and equal opportunity at HUD.
Under the terms of the agreement, MortgageIT will establish a $12 million fund to compensate borrowers nationwide who were unfairly denied a loan or whose loans violated the Fair Housing Act. Any remaining funds will be distributed to qualified organizations that provide credit and housing counseling, financial literacy, and other related programs that assist African-American and Hispanic homeowners.
