Archive

On April 25, the U.S. District Court for the Eastern District of North Carolina entered a consent order and approved a settlement resolving the DOJ’s complaint charging Four Oaks Bank with unlawfully allowing third party merchants to work through the bank to defraud consumers. Four Oaks’ clients included a Texas-based third-party payment processor that provided access to the national payment system to a wide variety of merchants. Four Oaks was specifically informed that many of […]

This is the third part of a five part series that explores issues related to discount points. The previous article explored UDAAP concerns resulting from unearned discount points. This article considers how unearned discount points may result in fair lending violations. Almost any lending practice may result in an disparate impact violation under the Equal Credit Opportunity Act (ECOA), as implemented by Regulation B, and the Fair Housing Act (FHA). Charging unearned discount points is […]

On July 12, 2012, Wells Fargo, the nation’s largest mortgage lender, agreed to settle with the Justice Department to resolve allegations that it steered black and Hispanic borrowers into subprime loans when similarly qualified white borrowers received mortgages with lower rates. The settlement requires Wells Fargo to provide $125 million to borrowers, $50 million in down-payment assistance in hard-hit regions where Justice found evidence of discrimination, and additional compensation to blacks and Hispanics who were […]

On May 31st the Department of Justice settled a fair lending case with Sun Trust Mortgage. The case was completely typical. The case: > Began with a referral from the bank’s regulator – the Federal Reserve Board. > Involved discrimination against black and Hispanic borrowers. > Involved pricing discrimination resulting from unguided lender discretion. DOJ continues to very active in this area. During the past few years DOJ has averaged about seven cases per year. […]