CFPB and Justice Department Charge Fairway for Redlining Black Neighborhoods in Birmingham, Alabama

The Consumer Financial Protection Bureau (CFPB) and the U.S. Department of Justice (DOJ) took action to end Fairway Independent Mortgage Corporation’s illegal mortgage lending discrimination against majority-Black neighborhoods in the greater Birmingham, Alabama area. The CFPB and DOJ allege that Fairway illegally redlined Black neighborhoods, including through its marketing and sales actions. Fairway’s actions discouraged people from applying for mortgage loans in the Birmingham metropolitan area’s Black neighborhoods. If entered by the court, the settlement would require Fairway to pay a $1.9 million civil penalty to the CFPB’s victims relief fund. Fairway would also be required to provide $7 million for a loan subsidy program to offer affordable home purchase, refinance, and home improvement loans in majority-Black neighborhoods. Redlining is the illegal practice of denying the same access to credit to certain neighborhoods based on the racial or ethnic composition of those areas. 

Fairway is a non-depository mortgage company based in Madison, Wisconsin, and operates in the Birmingham area under the trade name MortgageBanc. In 2023, Fairway was the third largest mortgage lender, receiving over 100,000 applications and originating over $24 billion in loans. In this closely held company, Steve Jacobson is the majority owner.

The complaint describes how Fairway redlined majority-Black neighborhoods in the Birmingham Metropolitan Statistical Area (Birmingham MSA). During the period covered by the complaint, the Birmingham MSA included six counties in north central Alabama with a population of about 1.1 million. While Fairway claimed to serve the entire metropolitan area, it concentrated all its retail loan offices in majority-white areas, directed less than 3% of its direct mail advertising to consumers in majority-Black areas during 2018-2020, and discouraged homeownership in majority-Black areas by generating loan applications at a rate far below its peer institutions.

The CFPB and DOJ allege that Fairway violated the Equal Credit Opportunity Act, the Consumer Financial Protection Act, and the Fair Housing Act. Specifically, the government alleges problematic conduct by Fairway including:

• Failing to address known signs of discrimination: Fairway's own data showed that it was failing to serve majority-Black neighborhoods in the Birmingham area. Before October 2022, it took no steps to address redlining risk other than telling loan officers not to discriminate. Only 3.7% of Fairway’s applications during 2018-2022 were for properties in majority-Black areas, compared to 12.2% for similar lenders. This disparity was higher in neighborhoods with 80% or more Black residents, where it made loans at less than 1/8 the rate of its peer lenders. Fairway did not adopt any written plan for marketing or growth to address the concern.

• Redlining Black neighborhoods: From 2015 through 2022, Fairway operated three retail loan offices and three loan production desks in real estate offices in the Birmingham metropolitan area, all in majority-white areas. Fairway also relied on referrals from real estate professionals and others to generate applications, and the vast majority of Fairway’s referral sources and referred consumers were located in majority-white areas. Fairway predominantly directed its marketing to majority-white areas. By doing this, Fairway unlawfully discouraged mortgage loan applications for properties in majority-Black neighborhoods.

Under the Consumer Financial Protection Act of 2010 (CFPA), the CFPB has the authority to take enforcement action against institutions that violate federal consumer financial protection laws, including violations of the Equal Credit Opportunity Act and its implementing regulation, Regulation B. The DOJ agreed with CFPB’s claim that Fairway violated the Equal Credit Opportunity Act and its implementing regulation, and separately alleges that Fairway violated the Fair Housing Act.

The proposed order filed by CFPB and DOJ would require Fairway to:

• Pay a $1.9 million penalty: The penalty against Fairway would be paid into the CFPB’s Civil Penalty Fund, also referred to as the victims relief fund.
• Provide $7 million for a loan subsidy program: The order would require Fairway to offer home purchase, refinance, and home improvement loans on a more affordable basis than otherwise available in majority-Black neighborhoods in the Birmingham metropolitan area.
• Pay at least $1 million to serve neighborhoods it redlined to address some of the gap in credit access caused by its discriminatory activities. Fairway would be required to open or acquire a new loan production office or full-service retail office in a majority-Black neighborhood in the Birmingham metropolitan area, and will pay (2) at least $500,000 for advertising and outreach, (3) at least $250,000 on consumer financial education, and (4) at least $250,000 on partnerships with community-based or governmental organizations to serve neighborhoods previously redlined by the company.

Read the proposed order.

Consumers can submit complaints about financial products and services by visiting the CFPB’s website or by calling (855) 411-CFPB (2372).

Employees who believe their company has violated federal consumer financial protection laws are encouraged to send information about what they know to whistleblower@cfpb.gov. To learn more about reporting potential industry misconduct, visit the CFPB’s website.

HUD Charges New Hampshire Property Managers and Landlord with Discrimination for a Retaliatory Eviction

 

The U.S. Department of Housing and Urban Development (HUD) has charged Greenview Associates L.P., Palmer Asset Management, LLC, and John Martin, property managers and landlord in Manchester, New Hampshire, with violating the Fair Housing Act by retaliating, threatening, or interfering with a tenant’s fair housing rights. HUD’s Charge alleges that, following the tenant’s filing of a Fair Housing complaint with HUD, the landlord and property manager did a background check on the tenant, not their usual practice of not running background checks, and then sought eviction of the tenant based on a long-past event that the background check revealed. Read HUD’s Charge.

A U. S. Administrative Law Judge will hear HUD’s charge unless any party to the charge elects to have the case heard in federal district court. If an administrative law judge finds, after a hearing, that discrimination has occurred, they may award damages to the individuals for their losses as a result of the discrimination, injunctive relief, other equitable relief, and payment of attorney fees. In addition, the judge may impose civil penalties to vindicate the public interest. If the federal court hears the case, the judge may also award punitive damages to the complainant.

For more information on potentially discriminatory evictions, please refer to this HUD Fact Sheet.

People who believe they are the victims of housing discrimination should contact HUD at (800) 669-9777 (voice) 800-927-9275 (TTY). Additional information is available at www.hud.gov/fairhousing and www.justice.gov. Materials and assistance are available for persons with limited English proficiency. Individuals who are deaf or hard of hearing may contact the Department using the Federal Relay Service at (800) 877-8339.

Read the October 11, 2024 HUD press release.

FBI 2023 Crime in the Nation Statistics Find Hate Crime Incidents Reached a Record High of 11,862 - 15% were Anti-Jewish

 

The FBI just released detailed data on over 14 million criminal offenses for 2023 reported to the Uniform Crime Reporting (UCR) Program by participating law enforcement agencies. Over 16,000 state, county, city, university and college, and tribal agencies, covering a combined population of 94.3% inhabitants, submitted data to the UCR Program through the National Incident-Based Reporting System (NIBRS) and the Summary Reporting System.

The data reveals that reported hate crime incidents were a new high of 11,862 in 2023. Although Jews only make up around 2% of the U.S. population, reported single-bias anti-Jewish hate crimes were 15% of all hate crimes reported and 68% of all reported religion-based hate crimes. Hate crimes were defined as offenses being motivated by bias toward race, ethnicity, ancestry, religion, sexual orientation, disability, gender, and gender identity.  

The FBI’s crime statistics estimates, based on reported data for 2023, show that national violent crime decreased an estimated 3.0% in 2023 compared to 2022:  

• Murder and non-negligent manslaughter recorded a 2023 estimated nationwide decrease of 11.6% compared to 2022.  
• In 2023, the estimated number of offenses in the revised rape category saw an estimated 9.4% decrease.  
• Aggravated assault decreased an estimated 2.8% in 2023. 
• Robbery decreased 0.3% nationally.  

To publish a national trend, the FBI’s UCR Program used a dataset of reported hate crime incidents and zero reports submitted by agencies reporting six or more common months or two or more common quarters (six months) of hate crime data to the FBI UCR Program for 2022 and 2023. According to this dataset, reported hate crime incidents decreased 0.6% from 10,687 in 2022 to 10,627 in 2023.  

The complete analysis is located on the FBI’s Crime Data Explorer.

Read the September 23, 2024 FBI article.

More Banks & Non-Bank Lenders are Omitting Racial Information from Home Loan Data — Preventing the Identification of Lending Discrimination

 

The Home Mortgage Disclosure Act (HMDA) legally requires 5,000 financial institutions that originated a home loan in the U.S. to collect information about race to help identify potential discrimination against borrowers. The data has in the past year been cited by the Consumer Financial Protection Bureau among others.

However, over 12% of borrowers do not give the information requested by the law and some 90% of loans sold to third parties do not provide the racial data that is acquired, according to the National Community Reinvestment Coalition (NCRC). “The impact is profound,” according to a new NCRC report “as these gaps hinder our ability to understand who is receiving loans and under what terms, which is vital for assessing fairness and inclusivity.”

To help fight the problem, the NCRC has pledged to never again use any data that doesn’t include demographics on race. “Beginning with this report, NCRC is eliminating records without demographic data from our calculations of the percent of loans made to specific races.” 

The NCRC and others say the missing data is largely due to loopholes in the HMDA. Passed in 1975, the HMDA rule requires that in-person and phone applicants provide demographic data - but online applicants can opt out.

Third-party loan purchasers are not required to track demographic information. Seven of the top 10 loan-purchasing institutions from 2023 used a loophole that allows them to erase borrower demographic data on the mortgages they bought, according to an NCRC report. “A few years ago, it was rare for lenders to buy loans and strip demographic data, but Citibank pioneered this practice. Now, many lenders who purchase loans use this loophole.” Citi declined to comment.

The NCRC report shows “in what might be a sign of a historic point” that Hispanic lending for home loans -16.5% of all 2023 home purchases - was nearly identical to their overall share of the U.S. adult population. Black borrowers' lending rates improved, though not near to their overall share of the population.

Unfortunately, these seemingly positive trends are difficult to confirm because of the incomplete data. Any increase in data collection about borrowers comes with increased risk of invasion of privacy. Though the CFPB says there’s low, if any, privacy risk in the HMDA, a 2017  report  by economist Anthony Yezer stated concerns such data collection could lead to widespread violations of privacy.

To the NCRC. “The extensive benefits of detailed data collection, encompassing income, race, sexual orientation and gender identity, decisively outweigh any concerns over burden or privacy. It’s imperative t hat efforts to curtail this essential data collection be recognized as not just misguided but as detrimental to the health and well-being of our communities.”

Read the October 4, 2024 Yahoo Finance article.

Read the October 3, 2024 Fortune article.

HUD Charges Owner & Operators of New Hampshire Apartment Buildings with Disability Discrimination

The U.S. Department of Housing and Urban Development (HUD) has charged Good Team Realty LLC, Jack O Cohen Revocable Trust, and Jack Cohen, owners and operators of more than 40 rental apartments in New Hampshire, with discriminating against potential tenants because of disability. The Charge alleges that the Respondents violated the Fair Housing Act by refusing to negotiate for and show an available apartment to prospective tenants who used assistance animals for their disabilities. Read HUD’s Charge.

“In 1988 the Fair Housing Act was extended to protect persons from discrimination in housing because of a disability, yet people with disabilities continue to be subjected to discriminatory treatment,” said Diane M. Shelley, HUD’s Principal Deputy Assistant Secretary for Fair Housing and Equal Opportunity. "Today's action demonstrates HUD's ongoing commitment to take appropriate action when housing providers fail to comply with the Fair Housing Act."

HUD’s Charge of Discrimination alleges that the Complainants spoke with property owner, Jack Cohen, about renting an apartment and that during the conversation the Complainants revealed that they had an assistance animal. The Charge further alleges that the Complainants arranged to meet Mr. Cohen to view the apartment but that Mr. Cohen refused to allow the Complainants inside the apartment because they did not have medical documentation verifying their need for the assistance animal with them at that time.

A U. S. Administrative Law Judge will hear HUD’s charge unless any party to the charge elects to have the case heard in federal district court. If an administrative law judge finds, after a hearing, that discrimination has occurred, they may award damages to the family for their losses as a result of the discrimination, injunctive relief, and other equitable relief, as well as payment of attorney fees. In addition, the judge may impose civil penalties and punitive damages to the complainant.

Go to HUD Fair Housing.

Coffee Break with Alice This Friday October 11th!

The next Coffee Break with Alice takes place Friday, October 11, 2024, at Noon.   Scan the QR Code or use the registration link below to receive the meeting link. Register to receive meeting link: CoffeeBreakOCT ###

Baltimore City Civil Rights Week 2024 Programming Announcement

The Office of Equity and Civil Rights is excited to invite you to join us for our annual Civil Rights Week from October 4th - 12th! We have several events scheduled throughout the week that touch on key topics including Police Accountability, The History of Redlining and Housing Discrimination in the city, Legislative Access for Women, a History of Immigration and Inclusion in Baltimore and more! Check out some of what's happening below and sign up to join us. All events are free and open to the public. Hope to see you there! Register Here!