OCC Agrees to $25 Million Settlement with Bank over Fair Housing Act Violations

On March 19, 2019, the OCC issued a consent order with a $25 million civil money penalty against a large national bank.  The order alleges that the national bank’s Relationship Loan Pricing (RLP) program resulted in eligible customers being denied the right benefits and being adversely affected on the basis of their race, color, national origin, or sex.

Under the program, customers who had a qualifying banking relationship with the bank at the time of the mortgage loan origination and applied for RLP eligible mortgages could receive either a credit to closing costs or an interest rate reduction. 

According to the consent order describing the settlement agreement, the OCC argued that the Fair Housing Act violations resulted from the bank’s failure to ensure effective risk management and internal controls in, among others, the following ways:

• The bank failed to provide adequate training to loan officers regarding how to offer RLP to bank customers;
• The bank’s written guidelines did not explicitly instruct loan officers to offer RLP to all eligible customers;
• The bank did not require its loan officers to document the basis for a customer’s rejection from the RLP program;
• The bank did not require its loan officers to inform customers of all discount programs for which they may have been eligible; and
• The bank did not hold adequate periodic reviews.

After finding that certain bank customers had not received the correct RLP benefit, the bank self-reported its findings to the OCC.  

Furthermore, according to the consent order and in addition to the $25 million civil money penalty, the bank has initiated and largely completed an approximately $24 million plan to reimburse approximately 24,000 customers who did not receive the appropriate RLP benefit.