JPMorgan settles mortgage discrimination lawsuit
JPMorgan Chase will pay US$55 million to settle federal charges that independent brokers working for the bank discriminated against minorities seeking home mortgages during the housing crisis.
While the settlement is not a big financial dent to the giant bank, the cases illustrate the depth of the mortgage quagmire that has trailed the financial sector for a decade.
A federal suit filed in Manhattan Wednesday accused JPMorgan Chase & Company of charging black and Hispanic borrowers higher interest rates and fees for mortgages from 2006 to at least 2009, causing them to pay an average of an extra thousand dollars. The lawsuit alleges that discrimination cost at least 53,000 minority borrowers tens of millions in higher interest payments and fees, in violation of the Fair Housing Act.
The lawsuit said Chase originated about 260,000 wholesale mortgage loans during those years, with 40,000 of the loans going to black applicants and another 66,000 going to Hispanic borrowers. It said the pricing discretion was not based on borrower risk.
The New York bank denied wrongdoing and shifted the blame.
"We've agreed to settle these legacy allegations that relate to pricing set by independent brokers," said JPMorgan spokeswoman Elizabeth Seymour. "We deny any wrongdoing and remain committed to providing equal access to credit."
While JPMorgan said those involved were independent brokers working under contract for the bank, federal prosecutors said that Chase maintained ultimate control and was "directly and extensively involved" in setting up the deals.
"Chase could have, but failed, to better monitor its wholesale brokers to discourage discrimination against borrowers based on race or national origin," the lawsuit said.