The Mortgage Firm, a Florida-based mortgage lender, has agreed to invest $1.75 million to settle a redlining case with the U.S. Department of Justice (DOJ), the parties announced. The DOJ accused the company of discrimination against predominantly Black and Hispanic neighborhoods in the Miami-Fort Lauderdale-West Palm Beach metropolitan area. The company ‘significantly underperformed’ its peers in generating applications from majority-Black and majority-Hispanic neighborhoods during 2016-2021. The complaint, filed in the Southern District of Florida, alleges violations of the Fair Housing Act and Equal Credit Opportunity Act. DOJ opened an investigation into The Mortgage Firm’s lending practices after receiving a referral from the Consumer Financial Protection Bureau.
A spokesperson at The Mortgage Firm told HousingWire that “throughout its 29-year history, the company has been committed to providing equal credit access to all communities within its lending footprint. The complete absence of legal or regulatory violations on The Mortgage Firm’s record speaks for itself.”
The company received 9,375 mortgage applications during 2016-2021, of which 30.4% were from residents of majority-Black and majority-Hispanic neighborhoods. Its peers’ share was 59%. The complaint also pointed out that the company had its offices located predominantly in white neighborhoods and took inadequate steps to market to and develop referral networks within Black and Hispanic neighborhoods.
The proposed consent order, which awaits court approval, would require The Mortgage Firm to:
- Conduct a Community Credit Needs Assessment to identify the credit needs of residents of predominantly Black and Hispanic neighborhoods in the Miami MSA and to consider the results in developing future loan programs, marketing campaigns, and outreach efforts.
- Provide $1.75 million for a loan subsidy program to offer affordable home purchase, refinance, and home improvement loans in predominantly Black and Hispanic neighborhoods in the Miami MSA. The program may provide lower interest rates, down payment assistance, closing cost assistance, or payment of initial mortgage insurance premiums.
- Conduct a detailed assessment of its fair lending program in the Miami MSA regarding fair lending obligations and lending in predominantly Black and Hispanic neighborhoods.
- Enhance its fair lending training and staffing to ensure equal access to credit is provided across their market area, including by employing a Director of Community Lending.
- Expand its outreach and advertising efforts by having an office location in a majority-Black and Hispanic neighborhood in Miami-Dade County, translating its website into Spanish, and requiring all of its loan officers in the Miami MSA to market to majority-Black and Hispanic neighborhoods.
- Bolster connections with the community and build referral sources in predominately Black and Hispanic neighborhoods by providing four outreach events annually, six financial education seminars per year, and partnering with at least one community partners to increase access to credit in predominately Black and Hispanic neighborhoods in the Miami MSA.
