CFPB and Lender Agree to Consent Order to Resolve Modern Redlining Case

The CFPB and a defunct mortgage lender recently agreed to a consent order to resolve the CFPB’s lawsuit alleging violations of ECOA for redlining majority-Black and Hispanic neighborhoods in the Chicago and Boston markets.  The order prohibits the mortgage lender from further involvement in residential mortgage lending for five years and requires payment of a $1.5 million penalty to the CFPB.

The CFPB’s theory of ECOA liability is that the mortgage lender favored lending in majority-white neighborhoods while disproportionately failing to serve majority-Black and Hispanic neighborhoods when compared to its peer lenders.  The CFPB alleged this discrimination was evident by the lender’s lack of offices, loan officers, marketing or outreach in majority-Black and Hispanic neighborhoods, thereby discouraging applicants and prospective applicants from seeking to purchase property in those neighborhoods and from making an application to the lender for such purchases.