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Re: CFPB, DOJ fine Hudson City $27M for mortgage discrimination violations
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Recently, the Supreme Court upheld 'Disparate Impact' in regards to mortgage origination.[/url] So even though the government cannot show any direct discrimination against any particular ethnic group, you can still be found guilty if the results are uneven. Because less of (*insert protected group here*) received a lower approval rate for loans compared to white people, it is automatically discrimination. Even if (*insert protected group here*) has overall poorer credit, lower household income, much less wealth, and resides in areas with unstable housing values.


That is not at all at how "disparate impact" claims work.

Disparate impact means that a plaintiff can make a prima facie showing of discrimination by pointing to a policy or practice that results in disproportionate impact on a particular group. If such a policy and disparity can be identified, then the defendant can show that there is a business necessity for the policy and other policies that would not have such an impact are unavailable.

As long as there is a valid business reason for a particular credit practice, it will be allowed.

Posted on: 2015/10/31 15:47
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Re: CFPB, DOJ fine Hudson City $27M for mortgage discrimination violations
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By RACHEL L. SWARNSOCT. 30, 2015

The green welcome sign hangs in the front door of the downtown branch of Hudson City Savings Bank, New Jersey?s largest savings bank. But for years, federal regulators said, its executives did what they could to keep certain customers out.

They steered clear of black and Hispanic neighborhoods as they opened branches across New York and Connecticut, federal officials said. They focused on marketing mortgages in predominantly white sections of suburban New Jersey and Long Island, not here or in Bridgeport, Conn.

The results were stark. In 2014, Hudson approved 1,886 mortgages in the market that includes New Jersey and sections of New York and Connecticut, federal mortgage data show. Only 25 of those loans went to black borrowers.

Hudson, while denying wrongdoing, agreed last month to pay nearly $33 million to settle a lawsuit filed by the Consumer Financial Protection Bureau and the Justice Department. Federal officials said it was the largest settlement in the history of both departments for redlining, the practice in which banks choke off lending to minority communities.

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Posted on: 2015/10/31 13:52
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Re: CFPB, DOJ fine Hudson City $27M for mortgage discrimination violations
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The underwriters don't care what race the person is applying for a loan. What is looked at is the appraised value of the property, credit history of the borrower, salary, employment history, other debt obligations (i.e. car loan, child support, etc.). I am not sure Hudson City is even a portfolio lender. Outside of community banks, most banks package their loans which are then sold to Fannie Mae or Freddie Mac. The bank just acts as the loan originator, where the bank makes money though closing the loan. Much of the underwriting is done by computer software. A data entry guy enters in the financial information (several hundred lines of information) and the computer then rules if the loan is approved for sale to Fannie or Freddie.

Note: A lot of bad loans were approved pre housing collapse by gaming how and what information was inputted.

Recently, the Supreme Court upheld 'Disparate Impact' in regards to mortgage origination. So even though the government cannot show any direct discrimination against any particular ethnic group, you can still be found guilty if the results are uneven. Because less of (*insert protected group here*) received a lower approval rate for loans compared to white people, it is automatically discrimination. Even if (*insert protected group here*) has overall poorer credit, lower household income, much less wealth, and resides in areas with unstable housing values.

The Obama administration has gone as far as filtering loan approvals by last name to look for "discrimination", as a way to guesstimate what the applicants ethnicity was.

So the lenders have a choice: Lower lending standards and take a hit with higher defaults. This however was a big factor in the 2008 collapse. Or, they can pay the fines. These are costs which get passed on to the public in the form of higher bank fees and other costs.

Posted on: 2015/9/29 12:03
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CFPB, DOJ fine Hudson City $27M for mortgage discrimination violations
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Interesting, this is the bank I got my GV mortgages

Brena Swanson

Largest redlining settlement in history.


The Consumer Financial Protection Bureau and the Department of Justice announced a joint action against Hudson City Savings Bank for providing unequal access to mortgage credit in Black and Hispanic neighborhoods.

If the court approves the consent, Hudson City will pay $25 million in direct loan subsidies to qualified borrowers in the affected communities, $2.25 million in community programs and outreach and a $5.5 million penalty.

This represents the largest redlining settlement in history to provide such direct subsidies. And according to the Department of Justice, this won't be the last, with an increased number of mortgage redlining investigations underway.

However, the DOJ noted that it is hard to say if there is an increase in the violations happening. Instead, the increases are mostly due to the investigations becoming a priority focus.

This complaint alleges that Hudson City illegally provided unequal access to credit to neighborhoods in New York, New Jersey, Connecticut and Pennsylvania.

The bank located branches and loan officers, selected mortgage brokers, and marketed products to avoid and thereby discourage prospective borrowers in predominantly Black and Hispanic communities.

The Equal Credit Opportunity Act prohibits creditors from discriminating against applicants in credit transactions on the basis of characteristics such as race, color, and national origin.

Additionally, the DOJ alleges that Hudson violated the Fair Housing Act, which also prohibits discrimination in residential mortgage lending.

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Posted on: 2015/9/28 20:03
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