FOR IMMEDIATE RELEASE                                          CR
TUESDAY, MAY 7, 1996                               (202) 616-2765
                                               TDD (202) 514-1888


     WASHINGTON, D.C. -- A mortgage company subsidiary of Fleet
Financial Group will pay $4 million for allegedly charging African
Americans and Hispanics higher prices for home mortgage loans than
comparably qualified whites, under an agreement reached today with
the Justice Department.
     In a complaint, filed today together with the agreement in
U.S. District Court in Brooklyn, the Justice Department alleged
that two branches of the Fleet Mortgage Corp. engaged in a pattern
of discrimination in the pricing of home mortgage loans.  It
claimed that the two branches, situated in Westbury, New York, and
Woodbridge, New Jersey, violated the Fair Housing Act and the Equal
Credit Opportunity Act.  
     "Loans should be based on risk, not race," said Assistant
Attorney General for Civil Rights Deval L. Patrick.  "By changing
their practices, Fleet has stepped forward and done the right
     Under today's agreement, Fleet will establish a $3.8 million
fund to compensate approximately 600 victims; spend $200,000 for
community outreach; implement a new monitoring and oversight
system; and continue recently adopted policies to ensure fair
pricing without regard to race or national origin.
     The Justice Department began reviewing the lending practices
of the mortgage company in September 1995, after an investigation
by the Federal Reserve Bank of Boston and the Federal Reserve Board
in Washington noted similar problems.
     The suit claimed the mortgage company charged African
Americans and Hispanics higher interest rates or up-front fees --
often called "overages" -- for home mortgage loans than similarly-
situated white borrowers.  
     Patrick said that an "overage" generally refers to the price
paid by the borrower in excess of any minimum price set by a
financial institution.  He said that loan officers of many
companies have the discretion to charge rates and fees higher than
the minimum; any amount obtained above the minimum price is an
"overage".  Loan officers typically receive some or all of the
excess price that they charge.  It is not commonly known that such
mortgage prices are negotiable.
     The suit claimed that from January 1993 through June 1994 the
mortgage company gave its loan officers at the two branches the
discretion to charge its customers higher prices, which provided
extra monetary commission to the loan officers who hiked  the
prices.  It also claimed the company gave the loan officers
discretion to charge borrowers an amount that was less than the
minimum price.  This practice is referred to as granting
     The company, based in Columbia, South Carolina, allegedly
imposed overages more often and granted underages less often on
home mortgage loans made to African American and Hispanic borrowers
than it did on loans to similarly qualified white borrowers.  
     Patrick noted that the disparities in the pricing did not
occur by chance and could not be explained by difference in the
borrowers' loan qualifications or other factors unrelated to race
or national origin.  Overages and underages, as used by Fleet, were
not related to risk.
     Under the settlement, which was approved today by the court,
the bank will compensate those minority borrowers who the parties
agree paid higher rates for loans between August 1993 and June
1994.  Victims will be compensated up to $15,000 each, depending on
the amount of the overage paid.
     Last October the Justice Department sued the Huntington
Mortgage Company in Columbus, Ohio, for using a similar scheme to
charge African Americans higher prices for home mortgage loans in
the Cleveland area.
     In addition to Huntington and Fleet, the Justice Department
has filed eight other suits against lenders that allegedly engaged
in discrimination.  A suit filed last month against a Nebraska bank
accused of charging higher rates to Native Americans is pending. 
Every other suit has settled.
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