Madison-headquartered non-depository mortgage company Fairway has agreed to pay $8 million and an almost $2 million civil penalty to resolve allegations that it engaged in a pattern of lending discrimination by redlining predominantly Black neighborhoods in Alabama, the Wisconsin State Journal reports.
According to the Justice Department and the Consumer Financial Protection Bureau, the company, d.b.a. MortgageBanc, through its marketing and sales actions, illegally redlined Black Birmingham neighborhoods and discouraged residents from applying for mortgage loans.
Fairway reportedly claimed to serve Birmingham’s entire metropolitan area but concentrated all of its retail loan offices in predominantly white areas, directing under 3% of its direct mail advertising to consumers in mostly Black areas and discouraging homeownership in those areas by generating loan applications at a rate largely lagging its peer institutions.
The settlement requires the following of Fairway:
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Provision of $7 million for a loan subsidy program that offers affordable home purchase, refinance, and home improvement loans in majority-Black Birmingham neighborhoods;
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Investment of another $1 million in programs supporting that loan subsidy fund; and
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A civil penalty payment of $1.9 million to the Consumer Financial Protection Bureau’s victims relief fund.
