JPMorgan Chase agreed to a $55 million settlement with the government on Wednesday, Jan. 18, the same day a federal lawsuit was filed alleging the financial institution racially discriminated against thousands of African-American and Latino mortgage borrowers between 2006 and 2009.
The suit accused the lending company of charging Black and Latino borrowers higher mortgage interest rates and fees than “similarly situated white borrowers” during that time. Average minority home buyers were alleged to have paid almost $1,000 more than white borrowers with the same risk profile, according to the complaint.
Overall, the U.S. government said the company’s alleged discrimination cost 53,000 mortgage borrowers “tens of millions of dollars in damages.”
Attorneys for JPMorgan Chase denied the claims but filed their response in court the same day the suit was brought.
“We’ve agreed to settle these legacy allegations that relate to pricing set by independent brokers,” the company said in a written statement Wednesday. “We deny any wrongdoing and remain committed to providing equal access to credit.”
USA Today reported the federal government sought damages for the affected Black and Latino borrowers, civil penalties and an order to prevent further racial discrimination.
The government said Chase failed to require its mortgage brokers to document the reasons for the adjusted rates and report discrimination. Moreover, the company reportedly gave independent brokers leeway to hike customers’ interest rates, which, in turn, boosted brokers’ pay.
As a result, the discrimination continued and African-American home buyers paid an average of $1,126 more for a $191,100 loan over a five-year period than white home buyers, the lawsuit stated. Latino borrowers paid an average of $968 more on a loan for $236,800.
“Chase could have, but failed, to better monitor its wholesale brokers to discourage discrimination against borrowers based on race or national origin,” the complaint read.
The U.S. government has gone after lending companies suspected of racial discrimination in the past, with the Justice Department’s Civil Rights Division obtaining more than $1.4 billion in relief under fair housing laws between 2010 and 2014, according to an agency report from August. In 2012, The Justice Department sued Wells Fargo for racial discrimination over the bank’s practice of targeting Black and Latino homeowners for subprime loans. The bank and the DOJ ultimately reached a $175 million settlement, Atlanta Black Star reported.