J.P. Morgan Chase & Co. has reached an agreement with the U.S. Justice Department to pay $55 million after being accused of charging thousands of minority home buyers a higher rate than white borrowers.
Wednesday, Preet Bharara, a U.S. attorney in the Southern District of New York, filed a lawsuit alleging that the bank had charged higher mortgage rates to more than 100,000 Hispanic and black home buyers between 2006 and 2009.
According to the lawsuit, “In thousands of instances, an African-American borrower with the same credit and risk profile as a white borrower, entering into the same type of mortgage, paid higher loan rates and larger fees.”
While the nation’s largest bank has agreed to settle, they maintain their innocence, stating that the loans in question originated by mortgage brokers who were not employed by the organization, hence the rates were set by the independent brokers.
In a statement released by the bank, they said, “We’ve agreed to settle these legacy allegations that relate to pricing set by independent brokers. We deny any wrongdoing and remain committed to providing equal access to credit.”
According to the suit filed by the U.S. government, over the first five years of the loan, the average Hispanic borrower paid roughly $968 more on an average loan of $236,800 and the average black borrower paid roughly $1,126 more on an average loan of $191,100.
“Even when Chase had reason to know there were disparities, however, Chase did not act to determine the full scope of these wholesale pricing disparities, nor did it take prompt and effective action to eliminate those disparities, nor did it engage in adequate efforts to remedy the impact of those disparities upon the borrowers,” the plaintiffs said in the suit.
H/T: The Wall Street Journal
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