WASHINGTON - The Justice Department announced today that it has reached a settlement with First Lowndes Bank in Lowndes County, Ala., resolving allegations that the bank engaged in a pattern or practice of discrimination against African-American customers by charging them higher interest rates on manufactured housing loans, in violation of the Fair Housing Act (FHA) and Equal Credit Opportunity Act (ECOA).
The Department’s complaint, filed in the U.S. District Court for the Middle District of Alabama, also alleges that First Lowndes Bank charged African-American customers higher interest rates than similarly situated white customers during at least 2004 and 2005.
Under the agreement, First Lowndes Bank will pay up to $185,000, plus interest, to compensate African-American borrowers who were charged higher interest rates. In addition, the bank has agreed to implement procedures to prevent discrimination in setting interest rates. The bank also will provide enhanced equal credit opportunity training to its officers and employees who set rates for housing loans.
"We are pleased that today’s lawsuit and settlement will help African-American borrowers," said Grace Chung Becker, Acting Assistant Attorney General for the Civil Rights Division. "The Department will continue to vigorously pursue cases alleging racial discrimination."
The settlement is in the form of a consent order, and is subject to court approval. Under the terms of the agreement, First Lowndes Bank is prohibited from discriminating against customers on the basis of race in its home mortgage lending and is subject to the jurisdiction of the court, should the terms of the agreement be violated in the future.
This case resulted from a referral by the Federal Deposit Insurance Corporation. A copy of the consent order between the United States and First Lowndes Bank, as well as additional information about fair lending enforcement by the Justice Department, can be obtained from the Justice Department Web site at http://www.usdoj.gov/fairhousing.