fbpx
Home Business JPMorgan Settle $55m Discrimination Complaint

JPMorgan Settle $55m Discrimination Complaint

by caribdirect
0 comments

JPMorgan

JPMorgan Chase has agreed to pay $55 million to settle an investigation into whether it charged thousands of African-American and Hispanic borrowers higher interest rates on mortgages than white customers.

The proposed settlement, which was announced Wednesday, would conclude a federal inquiry that began nearly seven years ago into possible discriminatory mortgage practices by JPMorgan, the nation’s largest bank.

The discriminatory loans were originated from at least 2006 to late 2009, according to a complaint filed this month by Preet Bharara, the United States attorney for the Southern District of New York. Black and Hispanic borrowers were charged, on average, $1,000 more than comparable mortgages given to whites, the complaint said.

The mortgages were made by independent brokers and then funded by JPMorgan, a standard practice in the years before the 2008 financial crisis, when banks relied on third parties to bring them lucrative loans through what was known as a wholesale network.

Many banks, including JPMorgan, no longer rely on third-party agents to broker loans.

JPMorgan released a statement Wednesday that 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.”

The United States attorney’s settlement with JPMorgan, which is subject to a judge’s approval, will close another mortgage case lingering from the fallout of the 2008 financial crisis.

The $55 million penalty is far less than the $175 million that Wells Fargo agreed to pay in 2012 to settle accusations that its independent brokers discriminated against African-American and Hispanic borrowers.

Under President Obama, federal prosecutors have investigated many lenders, large and small, on suspicion of discrimination. In 2010, the Justice Department established a unit to focus on unfair lending practices.

Prosecutors expanded their focus on racial discrimination into auto lending, where lenders were accused of buying loans brokered by car dealers who charged minority borrowers higher rates. The financial and auto industries questioned the method prosecutors and regulators used to determine whether loans were discriminatory.

Consumer and civil rights advocates said they expected the Justice Department to bring fewer racial discrimination cases against banks after Donald J. Trump becomes president.

Even though JPMorgan did not originate the loans, the federal complaint said that the bank gave mortgage brokers some discretion in setting the rates and fees on loans. The prosecutors cited a “causal connection” between the bank’s price discretion policies and the racial disparities among the mortgages.

The complaint also said that JPMorgan was “directly and extensively involved in setting the complete terms and condition of wholesale mortgage loans.”

Even when JPMorgan had reason to know there were pricing disparities, it did not determine the extent of the problem and act to stop it, the complaint said.

On average, an African-American borrower with a wholesale mortgage was charged $1,126 more in fees and interest on a loan of $191,100 over the first five years, the complaint said.

0
0
caribdirect

We provide news and information for anyone interested in the Caribbean whether you're UK based, European based or located in the Caribbean. New fresh ideas are always welcome with opportunities for bright writers.

You may also like

Leave a Comment

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More

Privacy & Cookies Policy

Copyright © 2024 CaribDirect.com | CaribDirect Multi-Media Ltd | CHOSEN CHARITY Caribbean New Frontier Foundation (CNFF) Charity #1131481