Manhattan U.S. Attorney Settles Lending Discrimination Suit Against JPMorgan Chase For $53 Million
Settlement Includes Admissions by the Bank and Provides Compensation for Borrowers Harmed by the Discriminatory Lending Practices
Preet Bharara, the United States Attorney for the Southern District of New York, announced today that the United States has filed and settled a federal civil rights lawsuit against JPMORGAN CHASE BANK, N.A. (“CHASE”) alleging discrimination on the basis of race and national origin in the conduct of its wholesale lending business, in violation of the Fair Housing Act (“FHA”) and the Equal Credit Opportunity Act (“ECOA”). The Consent Order between the parties was approved today by the Honorable Alison J. Nathan.
Manhattan U.S. Attorney Preet Bharara said: “Today’s settlement will compensate thousands of African-American and Hispanic borrowers who paid higher rates and fees on Chase mortgages than similarly situated white borrowers. In the settlement announced today, Chase admits the Government found that the bank’s wholesale lending brokers charged minority borrowers more than white borrowers in the same position. Such unequal treatment is not only unfair, but a violation of the Fair Housing Act.”
According to the stipulation of fact agreed to by the parties in the Consent Order, filed in federal court in Manhattan:
• Prior to January 2006 and continuing until early 2009, Chase originated and funded residential mortgage loans through a wholesale channel. Applications for these loans were brought to Chase by thousands of independent mortgage brokers throughout the United States who had entered into contracts with Chase for the purpose of bringing mortgage loan applications to it for origination and funding.
• From 2006 to 2009, approximately 360,000 wholesale mortgage loans were sourced by these independent brokers and brought to Chase. Of these, Chase reported that approximately 40,000 wholesale loans were made to African-American borrowers and that approximately 66,000 wholesale loans were made to Hispanic borrowers. Chase closed its wholesale channel in 2009.
• The government’s data model projects that, from at least 2006 through late 2009, certain of the approximately 106,000 African-American and Hispanic borrowers who obtained loans through independent mortgage brokers participating in Chase’s wholesale channel paid higher rates and fees on “wholesale” home mortgage loans compared to the rates and fees paid by similarly situated white borrowers who obtained loans through independent mortgage brokers participating in Chase’s wholesale channel. It projects that in thousands of instances, an African-American borrower entering into the same type of Chase wholesale mortgage as a white borrower paid higher loan rates and larger fees than such white borrower. Similarly, it projects that in thousands of instances, a Hispanic borrower entering into the same type of Chase wholesale mortgage as a white borrower paid higher loan rates and larger fees than such white borrower.
To compensate the estimated 50,000 African-American and Hispanic borrowers who paid higher rates and fees than similarly situated white borrowers, CHASE has agreed to create a settlement fund in the amount of approximately $53 million. CHASE has further agreed to retain an administrator to manage the settlement fund and to locate borrowers who may qualify for compensation. Borrowers who are African American and/or Hispanic and who obtained a mortgage through CHASE’s wholesale channel from 2006 through 2009 should be contacted by the administrator in the next several months, or can contact the United States Attorney’s Office directly, by contacting the Civil Rights Complaint Line at (212) 637-0840, using the Civil Rights Complaint Form available on the United States Attorney’s Office’s website http://www.justice.gov/usao/nys/civilrights.html, or by sending a written claim to:
U.S. Attorney’s Office, Southern District of New York
86 Chambers Street, 3rd Floor
New York, New York 10007
Attention: Chief, Civil Rights Unit
The case is being handled by the Office’s Civil Rights Unit. Assistant U.S. Attorneys Jean-David Barnea and David J. Kennedy are in charge of the case.