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The Mortgage Firm, a Florida-based mortgage lender, has agreed to invest $1.5 million to settle a redlining case with the U.S. Department of Justice (DOJ), the parties announced Wednesday.
The DOJ accused the company of discrimination against predominantly Black and Hispanic neighborhoods in the Miami-Fort Lauderdale-West Palm Beach metropolitan area. The complaint, filed in the Southern District of Florida, alleges violations of the Fair Housing Act and Equal Credit Opportunity Act.
A spokesperson at The Mortgage Firm told HousingWire that “throughout its 29-year history, the company has been committed to providing equal credit access to all communities within its lending footprint. The complete absence of legal or regulatory violations on The Mortgage Firm’s record speaks for itself.”
“Non-depository institutions, including mortgage companies, are now originating a higher share of loans to homebuyers than banks and credit unions,” Kristen Clarke, the DOJ’s assistant attorney general, said in a statement. “With this trend comes the obligation to ensure full compliance with our federal laws that prohibit redlining.”
According to the complaint, The Mortgage Firm “significantly underperformed” its peer lenders when generating mortgage applications from neighborhoods with high concentrations of Black and Hispanic neighborhoods in the Miami metro area from 2016 through 2021.
The company received 9,375 mortgage applications during the period, of which 30.4% were from residents of majority-Black and majority-Hispanic neighborhoods. Its peers’ share was 59%. The complaint also pointed out that the company had its offices located predominantly in white neighborhoods.
According to the Nationwide Multistate Licensing System (NMLS), The Mortgage Firm had 206 sponsored loan officers in 37 active branches as of Thursday.
The DOJ started the investigation after receiving a referral from the Consumer Financial Protection Bureau (CFPB). The resulting consent order requires court approval.
Per the consent order, The Mortgage Firm is required to conduct an assessment to identify the credit needs of minority communities in the Miami metro area, provide $1.75 million for a loan subsidy program and enhance its fair lending training, among other things.
The company’s spokesperson said that “The Mortgage Firm does not agree with the contention that its South Florida lending practices violated any laws or regulations, and the Company is not required to pay a civil money penalty under the settlement.
“Many of the agreed upon settlement terms are already in place at the Company. The Mortgage Firm’s decision to settle this matter out of court is based on its desire to avoid the cost of litigation and to move on from this disagreement relating to business activities that occurred approximately five to ten years ago. The Mortgage Firm looks forward to its continued investment in the South Florida communities,” the spokesperson added.
The Mortgage Firm marks the DOJ’s 16th redlining settlement under the Combating Redlining Initiative, through which the department has secured more than $153 million in relief for communities of color that have been impacted by lending discrimination.
