On May 28, the Consumer Financial Protection Bureau and the Department of Justice took enforcement action against Provident Funding Associates; the agencies found that the mortgage lender charged higher fees to African American and Hispanic borrowers. As early as 2006, the Center for Responsible Lending documented the pernicious extent of mortgage pricing disparities for borrowers of color by both brokers and lenders ("Unfair Lending", May 2006).
CRL senior vice president Paul Leonard offered the following remarks:
This action is a reminder that practices with racially discriminatory impacts still occur in today's mortgage markets and should never be tolerated.
We've seen this before. A lender provides broad discretion to mortgage brokers and this results in African American and Latino borrowers being systematically targeted for higher broker fees. It was a bad practice before the crisis and it is a bad practice today.
This action should serve as a warning that lenders must take immediate steps to stop discriminatory practices in their own companies or law enforcement agencies will step in and ensure that they do it.
For more information, please contact Catherine An at email@example.com or 202-349-1878.