Redlining, the act of discriminating against a group of people in the mortgage loan servicing process, is prohibited by the Fair Housing Act. Redlining often goes undetected as long as those being discriminated against don’t file a complaint with the government. When such complaints are reported to the FHA and HUD, they are taken seriously and investigated to insure violations of the Fair Housing Act don’t continue.
This week HUD announced a historic settlement in a redlining case in HUDNo.15-064. “The U.S. Department of Housing and Urban Development (HUD) today announced an agreement with Associated Bank, N.A. (Associated) to resolve a disparate treatment redlining case, one of the largest redlining complaints brought by the federal government against a mortgage lender. At approximately $200 million, it is the largest settlement of this kind HUD has ever reached.”
The settlement comes at the end of a HUD investigation to a Fair Housing act complaint, “alleging that from 2008-2010, the Wisconsin-based bank engaged in discriminatory lending practices regarding the denial of mortgage loans to African-American and Hispanic applicants and the provision of loan services in neighborhoods with significant African-American or Hispanic populations” according to the HUD press release.
“This settlement sends a strong message that HUD does not tolerate practices that unfairly restrict an equal and open housing market,” said HUD Secretary Julin Castro, as quoted in the press release. “Discriminatory lending practices have too often cut off too many credit-worthy families from the opportunities they need to thrive. This agreement will ensure that more Americans can fulfill their hopes and aspirations.”
In the coming 36 months, Associated has agreed to pay nearly $10 million, “in the form of lower interest rate home mortgages and down payment/closing cost assistance to qualified borrowers in majority-minority census tracts in the housing market areas of Chicago; Milwaukee; Minneapolis-St. Paul; Racine, Wisconsin; Kenosha, Wisconsin; and Lake County, Illinois.” As you can see, the payout covers a great deal of territory. According to HUDNo.15-064:
“HUD’s analysis of Associated Bank’s mortgage lending activity indicated that, compared to other mortgage lenders, Associated made few loans in majority-minority census tracts in five metropolitan areas in Illinois, Wisconsin, and Minnesota, but did make loans in nearby predominantly white tracts.”
The Fair Housing Act prohibits such discrimination. Borrowers who feel they have experienced such discriminatory practices should file a complaint with the HUD Office of Fair Housing and Equal Opportunity at (800) 669-9777(voice) or (800) 927-9275(TTY).
The FHA/HUD official site adds, “Housing discrimination complaints may also be filed at www.hud.gov/fairhousing or by downloadingHUD’s free housing discrimination mobile application, whichcan be accessed through Apple devices, such as the iPhone, iPad, and iPod Touch.”
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