USA Accuses Mortgage Firm of Racial Bias

     MANHATTAN (CN) – New York-based GFI Mortgage Bankers overcharged minority homeowners “hundreds” of times over the years, the United States says in a federal civil rights complaint.



     U.S. Attorney Preet Bharara said in a statement that the discrimination exacerbated the national housing crisis.
     “At a time when so many American homeowners of all races and nationalities are struggling to make their mortgage payments, it is unacceptable that, as we allege, the impact of GFI Mortgage’s business practices resulted in its African-American and Hispanic customers paying higher fees and interest rates for their residential mortgages,” Bharara said.
     GFI charged African-American and Latino borrowers higher rates and fees than it charged similarly situated white borrowers, from 2005 through 2009, according to the complaint.
     In 2007, African-American borrowers paid an average of $7,500 more, and Latinos paid $5,600 more over the first four years of their loans than their white counterparts, according to the complaint.
     Federal investigations found that the disparities were related to policy rather than credit risk and loan characteristics, Uncle Sam says.
     Instead of warning loan officers against discriminatory ratings, GFI gave loan officers “strong financial incentives” to price their loan products “as high as possible” by offering a cut of the profits from each loan, the complaint states.
     During the period of the alleged discrimination, GFI made about 300 home loans to African-American borrowers and 440 home loans to Latino borrowers in New York and New Jersey, according to the complaint.
     The government seeks unspecified money damages, a civil penalty and an injunction for violations of the Fair Housing Act and the Equal Credit Opportunity Act.

%d bloggers like this: