JPMorgan agrees to $55 mil settle of mortgage discrimination complaint -source

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By Dena Aubin | NEW YORK

NEW YORK JPMorgan Chase & Co has agreed
to pay $55 million to settle a U.S. Justice Department lawsuit
accusing it of discriminating against minority borrowers by
allowing mortgage brokers to charge them more for home loans, a
person familiar with the matter said on Wednesday.

The U.S. Justice Department complaint, filed in Manhattan
federal court on Wednesday, accused the bank of willfully
violating the U.S. Fair Housing Act and the Equal Credit
Opportunity Act between 2006 and 2009 and showing “reckless
disregard” for the rights of at least 53,000 African-American
and Hispanic borrowers.

“We’ve agreed to settle these legacy allegations that relate
to pricing set by independent brokers,” JPMorgan spokeswoman
Elizabeth Seymour said. “We deny any wrongdoing and remain
committed to providing equal access to credit.”

A spokeswoman for U.S. Attorney Preet Bharara had no
immediate comment.

The alleged discrimination involved so-called wholesale
loans that were made through mortgage brokers the bank used to
help originate loans, the complaint said. Chase allowed brokers
to change rates charged for loans from those initially set based
on objective credit-related factors, the complaint said.

As a result of that discretion, minorities were charged more
for home loans than white borrowers with the same credit
profile, paying tens of millions of dollars in additional
mortgage costs, the complaint said.

An African-American taking out a $191,100 loan on average
paid $1,126 more over the first five years of the loan than a
white borrower. An Hispanic borrower with a $236,800 loan paid
on average $968 more than a non-Hispanic white borrower, the
complaint said.

Chase did not require mortgage brokers to document the
reasons for changing rates and failed to address racial
discrimination, encouraging it to continue, the complaint said.

The Justice Department has been pursuing a number of banks
over alleged discrimination. From 2010 to 2014, the agency’s
Civil Rights Division obtained more than $1.4 billion in relief
under fair housing laws, according to an August report.

In one case, Wells Fargo & Co agreed to pay $175
million to settle allegations that it charged African American
and Hispanic borrowers higher rates and fees on mortgages.

Cities around the country, including Miami, Baltimore and
Los Angeles, also have filed lawsuits claiming that major banks
targeted minorities for high-cost loans that often ended in
foreclosures.

The bank first disclosed Bharara’s lawsuit in a quarterly
filing in 2015. (additional reporting by Jonathan Stempel and Lauren LaCapra)



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