National City Bank will pay $35 million to settle a complaint brought by the Consumer Financial Protection Bureau (CFPB) and the Department of Justice (DOJ) alleging that the bank discriminated against African-American and Hispanic borrowers by charging them higher mortgage interest rates compared to similarly creditworthy white borrowers.
National City Bank, through its successor PNC Bank, will pay the penalty in the form of restitution to borrowers who were harmed by its practices. The alleged discrimination took place between the years 2002 and 2008, according to a CFPB press release. During this time, the bank approved more than 1 million mortgage loans, including 600,000 through independent brokers. PNC acquired National City at the end of 2008.
The CFPB and DOJ's action is the result of an investigation that began in 2011. The case represents the first time the CFPB and DOJ joined forces to enforce federal fair lending laws.
‘Borrowers should never have to pay more for a mortgage loan because of their race or national origin,’ says Richard Cordray, director of the CFPB, in a release. ‘Today's enforcement action puts money back in the pockets of harmed consumers and makes clear that we will hold lenders accountable for the effects of their discriminatory practices.’
‘This settlement will provide deserved relief to thousands of African-American and Hispanic borrowers who suffered discrimination at the hands of National City Bank,’ adds Attorney General Eric Holder. ‘As alleged, the bank charged borrowers higher rates not based on their creditworthiness, but based on their race and national origin. This alleged conduct resulted in increased loan prices for minority borrowers. This case marks the Justice Department's latest step to protect Americans from discriminatory lending practices and shows we will always fight to hold accountable those who take advantage of consumers for financial gain.’
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