In the first law enforcement action of its kind in New York state, two mortgage brokerage companies – HCI Mortgage and Consumer One Mortgage – will collectively pay $665,000 in restitution to approximately 455 black and Latino borrowers who were illegally charged higher fees than similarly situated white borrowers, New York Attorney General Andrew M. Cuomo says.
The companies collectively operate more than 20 branches throughout the state. Cuomo has also filed a lawsuit in federal district court against another mortgage brokerage company – U.S. Capital Funding LLC – that the attorney general says engaged in similar discriminatory practices.
"The blatant discrimination in this case is as illegal as it is inexcusable," Cuomo says. "These customers were charged significantly higher fees for no reason other than being a minority – something that is explicitly against the law in New York state. Today's agreements will put in place the necessary controls to ensure mortgage brokers comply with the law and offer fair and legitimate rates to all New Yorkers."
The attorney general's office, the New York State Banking Department and fair lending experts conducted statistical analyses of loans arranged by HCI Mortgage and Consumer One and concluded that, on average, black and Latino borrowers were charged several thousand dollars more in up-front fees than white borrowers.
In addition to requiring the companies to pay restitution, the agreements require the them to adopt a standard fee schedule that will be disclosed to borrowers and must be followed unless exceptional circumstances exist, internally monitor and analyze the imposition of fees to ensure that black and Latino borrowers are treated fairly and equally, and provide detailed reports to the attorney general's office to ensure compliance with the agreement.
Cuomo's office conducted a similar investigation of U.S. Capital Funding and concluded that the company also had violated fair lending laws by charging much higher fees to black and Latino borrowers. His lawsuit against U.S. Capital Funding seeks restitution for over 100 minority borrowers and a court order requiring the company to cease its discriminatory practices.
SOURCE: The Office of Attorney General Andrew M. Cuomo