Summary: JPMorgan has settled a discrimination lawsuit for $55 million.
Imagine paying more for your mortgage than someone else with your same credit score. Imagine that higher rate was given because of your race, and then imagine that this type of discrimination still occurs in the 21st century. While it all sounds so ridiculous, JP Morgan Chase & Co allegedly practiced that action a few years ago. The giant banking corporation recently settled a lawsuit with the U.S. Department of Justice after they were accused of charging African-American and Hispanic borrowers more for mortgages than their white counterparts.
While JP Morgan Chase did not admit fault, they agreed this week to settle the DOJ’s lawsuit for $55 million. The DOJ’s complaint was filed in New York on Wednesday, and it alleged the bank willfully violated the U.S. Fair Housing Act and the Equal Credit Opportunity Act, Reuters reported.
JP Morgan Chase allegedly overcharged 53,000 African-American and Hispanic loan borrowers from 2006 to 2009. JP Morgan spokeswoman Elizabeth Seymour stated that the bank was settling the work of independent brokers. These mortgage brokers changed bank rates for minority customers, even though there was a standard rate based upon credit-related factors. As a result of these changes, minorities paid more on home loans than white borrowers with the same credit score. This resulted in them paying tens of millions of dollars more in additional loan costs.
“We’ve agreed to settle these legacy allegations that relate to pricing set by independent brokers,” Seymour said. “We deny any wrongdoing and remain committed to providing equal access to credit.”
At the time, JP Morgan Chase did not require its brokers to document reasons for altering the mortgage rates. The DOJ complaint said that the banking company did not have any policies in place to address racial discrimination.
The DOJ also prosecuted Wells Fargo for charging minority borrowers more for their mortgages, and Wells Fargo agreed to pay $175 million to settle.
Source: Reuters
Photo courtesy of Quartz
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