GFI Mortgage Bankers Inc., a firm concentrating on New York, New Jersey and Florida, agreed to pay $3.56 million to resolve a lawsuit in which it was accused of discriminating against black and Hispanic borrowers.
The New York-based company admitted to charging higher interest rates and fees to black and Hispanic borrowers than for similarly qualified white borrowers from 2005 to 2009, the U.S. Attorney’s Office in Manhattan said today. The firm also agreed to reform its practices, the government said.
“The swift resolution of this case demonstrates the commitment of this office and the entire Department of Justice to aggressively enforcing the laws against discriminatory lending, and to holding accountable those who engage in this illegal conduct,” U.S. Attorney Preet Bharara said in a statement.
The Justice Department sued the lender in April alleging that it engaged in a pattern of discriminatory lending. The company described itself on its website as “one of the largest licensed home mortgage firms” and said it funds more than $1 billion in mortgages annually.
GFI previously argued that it had no legal liability for any of the conduct alleged in the case, according to a consent order filed yesterday with the court.
In settling the case, the company acknowledged that a statistical analysis showed it charged interest rates that were from 19 to 41 basis points higher for black borrowers and from 20 to 23 basis points higher for Hispanic borrowers than for white borrowers with similar credit characteristics, according to the order.
The analysis also showed the company charged fees that were from 73 to 105 basis points higher for black borrowers and from 27 to 56 basis points higher for Hispanic borrowers than for similarly-situated white borrowers, the filing said.
A basis point is the equivalent of 0.01 percentage point.
“Notwithstanding its strong denial of DOJ’s discrimination claims in this lawsuit, GFI has always preferred to settle this case provided it could do so on affordable terms,” said Andrew L. Sandler, counsel for the lender, of Buckley Sandler LLP. “Last week, DOJ offered such terms and the case quickly settled. GFI can now return its full focus to its mortgage lending business.”
The case is U.S. v. GFI Mortgage Bankers Inc., 1:12-cv- 02502, U.S. District Court, Southern District of New York (Manhattan).
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