On November 5, 2013, the U.S. Department of Housing and Urban Development (HUD) announced that it had reached a settlement with MortgageIT, Inc., Deutsche Bank subsidiary, regarding claims that the lender had discriminated in making mortgage loans. HUD had alleged that the lender discriminated against African American and Hispanic borrowers with practices that led to African Americans and Latinos being charged higher Annual Percentage Rates (APRs) and fees than similarly-situated white borrowers, and denied minority applicants loans more often than similarly-situated white applicants. Under the settlement, MortgageIt will pay $12.1 million to compensate borrowers nationwide who were unfairly been denied a loan or whose loans may have contained terms and conditions that violate the Fair Housing Act. Any funds remaining after all victims have been compensated will be distributed to qualified organizations that provide credit and housing counseling, financial literacy, and other related programs that assist African American and Hispanic potential, current, and former homeowners.
According to HUD a press release announcing the settlement,
This agreement is the result of a complaint that HUD’s Assistant Secretary for Fair Housing and Equal Opportunity filed against MortgageIT, alleging that the company discriminated against African American and Hispanic borrowers by underwriting, approving, purchasing, and securitizing mortgage loans in a manner that allowed pricing and denial disparities on the basis of race and national origin. A HUD review of MortgageIT’s 2007 and 2008 internal loan data alleged that African American and Hispanic borrowers paid APRs that were eight to ten basis points higher, on average than similarly-situated white borrowers. In addition, HUD alleged that African American borrowers were 65 percent and Hispanic borrowers 72 percent more likely to receive higher priced loans than similarly-situated white borrowers, African American and Hispanic borrowers also allegedly paid, on average, $707 and $906 more in fees, respectively. HUD also alleged that African-American applicants were 45 percent more likely to be denied a mortgage loan than similarly-situated white borrowers. Hispanic applicants were allegedly 35 percent more likely to be denied.
To read HUD’s press release regarding this case, click here.