On the lending discrimination front ...
A settlement agreement announced this week to resolve lending discrimination allegations reminded me of a report that found FHA interest rates varying by race.
The report, released by Communities United, said Baltimore residents getting FHA mortgages in 2008 were twice as likely to receive high-cost loans if they lived in minority neighborhoods than if they lived in white neighborhoods. But did the trend point to discrimination or the topsy-turvey environment of that year? Federal Reserve economists analyzing the data thought the latter.
But PrimeLending, a major FHA lender, has just agreed to pay $2 million to "resolve allegations that it engaged in a pattern or practice of discrimination against African-American borrowers between 2006 and 2009," the Justice Department said Wednesday.
Details from the announcement:
Between 2006 and 2009, PrimeLending charged African-American borrowers higher annual percentage rates of interest for prime fixed-rate home loans and for home loans guaranteed by the Federal Housing Administration and Department of Veterans Affairs than it charged to similarly-situated white borrowers. PrimeLending gave its employees wide discretion to increase their commissions by adding "overages" to loans, which increased the interest rates paid by borrowers. This policy had a disparate impact on African-American borrowers. The Justice Department for more than a decade has identified the charging of overages as a means by which lending discrimination can occur.