PrimeLending to pay $2 million to settle Justice Department racial-bias case
A large Texas mortgage lender with operations across much of the nation has agreed to pay $2 million to borrowers to resolve Justice Department allegations that it discriminated against African Americans from 2006 through 2009.
PrimeLending, a subsidiary of the Dallas bank holding company PlainsCapital Corp., operated mainly in Texas but had offices in 32 states including California, according to a Justice Department news release. The company did not admit to any wrongdoing in settling the case, which stemmed from a referral from the Federal Reserve in December 2009.
In a statement, PrimeLending said it worked with the government "in an open and cooperative effort to seek a mutually agreeable resolution of this matter."
It added: "PrimeLending denies any wrongdoing. There has been no factual finding or adjudication with respect to any matter alleged by the DOJ. We work diligently to meet or surpass the standards set by all federal and state regulations that apply to our businesses."
The consent order settling the case, which requires PrimeLending to adopt strict antidiscriminatory measures internally and to contact borrowers eligible for refunds, was filed in Dallas federal court.
The case is one of several federal investigations into alleged racial discrimination by mortgage lenders, including what Justice spokeswoman Xochitl Hinojosa has said is an ongoing probe of former No 1. lender Countrywide Financial Corp., the Calabasas company that is now part of Bank of America Corp.
One major settlement was filed last March, when two American International Group Inc. subsidiaries agreed to pay at least $6.1 million to resolve allegations that they wronged black customers by failing to ensure that mortgage brokers were pricing their loans fairly.
A list of the Justice Department's fair housing cases is available at this website.
The PrimeLending civil complaint alleged that the company's loan officers abused their discretion in pricing loans to charge black borrowers higher interest rates than white borrowers in similar financial circumstances.
This was "a practice that occurred all too often during the past decade and stripped a vast amount of wealth from communities of color,” said Asst. Atty. Gen. Thomas E. Perez, who is in charge of the Justice Department’s civil rights division.
The complaint said that African American borrowers who obtained traditional fixed-rate loans from PrimeLending were charged higher interest rates that resulted in them paying, on average, $220 to $280 more per year for a $200,000 loan than similarly situated white borrowers.
PrimeLending, a Top 20 Federal Housing Administration lender, also charged black borrowers more for FHA loans, the Justice Department said.
-- E. Scott Reckard