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Assistant Attorney General for the Civil Rights Division
Thomas E. Perez Speaks on the Fair Lending Settlement with SunTrust Mortgage Inc.


Washington, DC
United States

Good afternoon.  Thank you for joining us today to discuss the department’s $21 million settlement with SunTrust Mortgage for discrimination in the pricing of mortgage loans. I am honored to be joined today by Neil MacBride, the United States Attorney for the Eastern District of Virginia, whose office worked jointly on this case with the Civil Rights Division. Neil has been an excellent partner on a range of issues, including fair lending and protecting the rights of our servicemen and women. I appreciate his leadership and partnership.

I’d also like to acknowledge the contributions of the Federal Reserve Board.  The department opened its investigation of SunTrust after receiving a referral from the Federal Reserve. The Federal Reserve has been an excellent partner in our fair lending enforcement work. Many of our fair lending cases, including the landmark $335 million settlement with Countrywide, involved referrals from the Federal Reserve. The work of the Federal Reserve and our other regulatory partners is essential to the effective enforcement of our fair lending laws.

Today’s settlement with SunTrust is the second largest fair lending settlement in the department’s history. The settlement shows that while we will vigorously investigate lending practices for discriminatory and other illegal conduct, we will work constructively with responsible lenders like SunTrust that are willing to take the necessary steps to ensure equal opportunity for all. We commend SunTrust for taking action to implement strong fair lending policies, to ensure that discrimination is absent from their current and future lending, even before they knew the full results of our investigation.

Our complaint against SunTrust alleges that its systemic discrimination over a five-year period violated the Equal Credit Opportunity Act and the Fair Housing Act, and impacted more than 20,000 African-American and Hispanic families. We reviewed data on more than 850,000 loans, including data loan terms and information on each borrower’s creditworthiness. And we identified victims across the country in 34 states and the District of Columbia.

This case involves prime loans and borrowers with strong credit qualifications who nonetheless were subject to discrimination.

At the core of the complaint is a simple story. If you were African-American or Latino, you likely paid more for a SunTrust loan than a similarly-qualified white borrower simply because of your skin color. You paid what amounted to a racial surtax that ranged from hundreds to thousands of dollars.

This was true whether your loan was originated by a mortgage broker: for example, in 2008, Latino customers in Dallas borrowing $200,000 through the bank’s wholesale lending channel paid approximately $1,360 more than the average paid by similarly –qualified white borrower. Or if your loan was originated by one of SunTrust’s own loan officers: for example, in 2007 SunTrust charged African-American retail customers in Atlanta borrowing $200,000 an average of about $745 more than similarly qualified white borrowers.

SunTrust set prices – as often as every day – based on objective credit related criteria, but allowed its loan officers and brokers to alter those prices without regard to borrower risk. This subjective and unguided discretion resulted in African-American and Latino borrowers paying more than similar qualified white borrowers.  SunTrust incentivized discrimination by sharing its discriminatory charges with any retail mortgage loan officer or wholesale mortgage broker who could obtain inflated prices from African-American and Hispanic borrowers. Furthermore, SunTrust did not require its employees to justify or document the reasons for many of the pricing adjustments not based on borrower risk and failed to adequately monitor for and fully remedy the effect of racial disparities in those pricing adjustments. Our complaint alleges that these policies had a disparate impact on African-American and Latino borrowers.

SunTrust’s African American and Latino borrowers had no idea they could have gotten a better deal. No idea that white borrowers with similar credit would pay less. That is discrimination with a smile.

Today’s settlement with SunTrust builds on an unprecedented period of fair lending enforcement by the department. Since the establishment of the Fair lending Unit, thanks to the committed career professionals in the Division, we have brought record numbers of enforcement actions.  In the approximately 30 months since the Unit was established, the Division filed or resolved 18 lending matters. By way of contrast, from 1993 to 2008, the Department filed or resolved 37 lending matters, an average of a little more than 2 cases per year.

While the federal government must be a credible deterrent to those who would chose to violate our fair lending laws, the best policing is often policing that comes from within. That work is vital to ensuring fair and equal treatment for borrowers. And the success of thoughtful and comprehensive compliance work and attention to fair lending is reflected in the fact that the vast majority of lenders are not violating the law. That is why I believe that SunTrust should be commended for implementing strong fair lending policies.

We will continue our efforts to ensure that those harmed by discriminatory conduct during the mortgage boom get compensation.  We will also investigate and bring enforcement actions to confront emerging discriminatory practices in the credit market.  We will continue to aggressively enforce the law to protect the rights of all who face discrimination to ensure fair and equal access to credit for all as the law requires.

Thank you. I look forward to answering any questions.

Updated September 17, 2014