The banking giant allegedly spent years discriminating against minority borrowers
Another day, another case of a bank redlining borrowers. This time, it’s JPMorgan Chase, agreeing to pay a $55 million penalty to settle allegations that it discriminated against black and Hispanic mortgage borrowers between 2006 to 2009.
A government lawsuit filed in New York Wednesday alleged that independent brokers of the bank charged higher mortgage rates and fees to minority borrowers versus “similarly situated white borrowers,” according to a USA Today report.
U.S. Attorney Preet Bharara of the Southern District of New York filed the lawsuit, claiming the average black or Hispanic homebuyer was charged around $1,000 more than white borrowers with the same risk profile.
Attorneys for the bank denied the allegations through a response in court.
“We’ve agreed to settle these legacy allegations that relate to pricing set by independent brokers," the company said in a statement. "We deny any wrongdoing and remain committed to providing equal access to credit.”
The government accused the bank of allowing its independent mortgage brokers to arrange prices based on factors that had nothing to do with borrower risk. Brokers were allowed to do this “without documentation or justification,” according to USA Today. The lawsuit also accused Chase of giving its brokers rewards for charging higher interest rates.
On an average loan of $236,800, the average Hispanic borrower had to pay $968 more than the average white borrower over the first five years of the loan, according to the lawsuit. The average black borrower was charged $1,126 more over five years on an average loan of $191,000.
According to the lawsuit, "Even when Chase had reason to know there were disparities, however, Chase did not act to determine the full scope of these wholesale pricing disparities, nor did it take prompt and effective action to eliminate those disparities, nor did it engage in adequate efforts to remedy the impact of those disparities upon the borrowers.”
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A government lawsuit filed in New York Wednesday alleged that independent brokers of the bank charged higher mortgage rates and fees to minority borrowers versus “similarly situated white borrowers,” according to a USA Today report.
U.S. Attorney Preet Bharara of the Southern District of New York filed the lawsuit, claiming the average black or Hispanic homebuyer was charged around $1,000 more than white borrowers with the same risk profile.
Attorneys for the bank denied the allegations through a response in court.
“We’ve agreed to settle these legacy allegations that relate to pricing set by independent brokers," the company said in a statement. "We deny any wrongdoing and remain committed to providing equal access to credit.”
The government accused the bank of allowing its independent mortgage brokers to arrange prices based on factors that had nothing to do with borrower risk. Brokers were allowed to do this “without documentation or justification,” according to USA Today. The lawsuit also accused Chase of giving its brokers rewards for charging higher interest rates.
On an average loan of $236,800, the average Hispanic borrower had to pay $968 more than the average white borrower over the first five years of the loan, according to the lawsuit. The average black borrower was charged $1,126 more over five years on an average loan of $191,000.
According to the lawsuit, "Even when Chase had reason to know there were disparities, however, Chase did not act to determine the full scope of these wholesale pricing disparities, nor did it take prompt and effective action to eliminate those disparities, nor did it engage in adequate efforts to remedy the impact of those disparities upon the borrowers.”
Related stories:
Banks’ surprising request: Don’t trash Dodd-Frank
Trump considering two top picks for Treasury
