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GFI Mortgage Bankers, Predatory Lending, Florida 2009
GFI Mortgage Bankers Inc., a large and independent mortgage lender in the New York, New Jersey, and Florida markets, will pay $3.555 million to resolve a predatory lending lawsuit filed by the US government and the Southern District of New York. The lawsuit alleges that GFI exhibits a pattern or practice of discrimination by charging qualified African American and Hispanic borrowers more for residential home loans than similarly qualified white non-Hispanic borrowers between 2005 and 2009.
Under the agreement, GFI will provide $3.5 million in compensation to approximately 600 African American and Hispanic borrowers identified by the US government who paid more for a loan based on their race or national origin, and will also pay the maximum civil penalty of $55,000 allowed by the Fair Housing Act. The agreement also requires GFI to develop and implement new policies that limit the pricing discretion of its loan officers, require documentation of loan pricing decisions, and monitor loan prices for unjustified disparities by race and national origin that cannot be explained by objective credit characteristics of the borrower.
As part of the agreement, GFI admits that its analysis of interest rates and fees charged to qualified borrowers for home loans demonstrated statistically significant disparities between white non-Hispanic borrowers and African American and Hispanic borrowers that could not be explained by objective credit characteristics of the borrower or the loan product. The company also admitted that it offered financial incentives to its loan officers to charge higher interest rates and fees to borrowers and that it had not implemented training and monitoring programs on fair lending to prevent those disparities in interest rates and fees.
The agreement was reached after the US government opposed GFI’s motion to dismiss the case and the court had expressed skepticism over GFI’s argument that federal law allows lenders to set prices for loans in a way that produces this type of disparate impact on minority borrowers.
GFI Mortgage Bankers, a large and independent mortgage lender, has agreed to pay $3.555 million to resolve a predatory lending lawsuit filed by the US government and the Southern District of New York. The company will provide $3.5 million in compensation to approximately 600 African American and Hispanic borrowers who paid more for a loan based on their race or national origin. GFI will also pay the maximum civil penalty of $55,000 allowed by the Fair Housing Act.
Thomas E. Perez, Secretary of the Civil Rights Division, said, “The US government will not hesitate to litigate against lenders to enforce federal fair lending laws when the evidence warrants it and obtain compensation for borrowers who were victims of illegal practices in obtaining loans.”
Preet Bharara, US Attorney for the Southern District of New York, said, “With the settlement announced today, the hundreds of victims of GFI’s discriminatory lending practices will be compensated fairly. In addition, the company has admitted the conduct that led to this lawsuit and accepted reforms to its residential lending practices.”
GFI Mortgage Bankers, Predatory Lending, Florida 2009
GFI Mortgage Bankers, a large and independent mortgage lender, has agreed to pay $3.555 million to resolve a predatory lending lawsuit filed by the US government and the Southern District of New York. The company will provide $3.5 million in compensation to approximately 600 African American and Hispanic borrowers who paid more for a loan based on their race or national origin. GFI will also pay the maximum civil penalty of $55,000 allowed by the Fair Housing Act.
GFI Mortgage Bankers Inc.
Criminal Charges: Predatory Lending
City and State: New York, New York
Date: 2009
Sentence: $3.555 million settlement
Key Facts
- State: Florida
- Category: Fraud & Financial Crimes
- Source: DOJ Press Release â†â€â€
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