JPMorgan will pay $55M to settle discrimination suit
Feds allege bank overcharged black, Hispanic borrowers
JPMorgan Chase agreed to a $55 million settlement with the government over allegations that it discriminated against “thousands” of African-American and Latino mortgage borrowers, it was disclosed Wednesday.
The bank’s independent brokers charged minority borrowers higher mortgage interest rates and fees from 2006 to 2009 compared to “similarly situated white borrowers,” according to a government lawsuit filed in a New York federal court.
JPMorgan is expected to settle the lawsuit for $55 million without admitting any liability.
“We’ve agreed to settle these legacy allegations that relate to pricing set by independent brokers,” the company said in a statement. “We deny any wrongdoing and remain committed to providing equal access to credit.”
The settlement was just one of the actions reported Wednesday taken against JPMorgan by the government. The Labor Department said it filed a lawsuit against JPMorgan alleging the bank has systematically discriminated against female employees by paying them less than men in similar jobs. JPMorgan responded that it is committed to diversity in the workplace and is a “neutral decision maker.”
The mortgage lawsuit, filed by U.S. attorney Preet Bharara of the Southern District of New York, alleges the average black or Hispanic home buyer paid about $1,000 more than white borrowers with the same risk profile.
Altogether, the alleged discrimination cost at least 53,000 borrowers “tens of millions of dollars in damages,” the government said. JPMorgan Chase attorneys denied the allegations in a response filed in court.
In the lawsuit, the U.S. government sought damages for borrowers, civil penalties and an order preventing further discrimination.
The bank gave its independent mortgage brokers the discretion to adjust pricing based on factors not related to borrower risk without documentation or justification, the government alleged. The lawsuit also accuses Chase of rewarding brokers with bonuses for charging interest rates above those based on standard credit criteria.
The average black borrower paid about $1,126 more over the first five years on an average loan of $191,100, according to the government, while the average Hispanic borrower paid about $968 more on an average loan of $236,800.
“Even when Chase had reason to know there were disparities, however, Chase did not act to determine the full scope of these wholesale pricing disparities, nor did it take prompt and effective action to eliminate those disparities, nor did it engage in adequate efforts to remedy the impact of those disparities upon the borrowers,” the plaintiffs charged in the lawsuit.