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| A mortgage banker has agreed to pay the U.S. Department of Housing and Urban Development $500,000 to resolve charges of alleged discrimination against African Americans and Hispanics.
SouthStar Funding LLC agreed to the settlement, which resolved a complaint filed earlier this year by the National Community Reinvestment Coalition, HUDÂ announced today. SouthStar refused to make loans on Baltimore row houses valued under $100,000, the statement said. Because the lower-priced neighborhoods where row houses are located have a heavy concentration of African Americans and Hispanics, the practice allegedly led to discrimination. The settlement calls for the Atlanta-based lender to pay NCRC over four years the $500,000, which will be used to combat discrimination, the announcement said. SouthStar will also exclude property type and value from factors considered in determining whether to offer a loan. HUDÂ said the agreement also requires the company to change its underwriting criteria on row homes so that they match the criteria for townhomes and condominiums. In addition, if a mortgage is denied, the credit risk manager or a senior underwriter with mandated specialized training must review the application. All of the officers and production employees of SouthStar must complete a training course within six months, according to a copy of the 9-page settlement. New production employees will have 30 days to complete the training. SouthStar also agreed to advertise through media that serve the general public, the Latino community and the African-American community, the settlement said. It will notify mortgage brokers and secondary market investors about the removal of the $100,000 minimum loan amount requirement. “Our hope is that other mortgage companies will take note and examine their policies that impose similar restrictions,” said HUD’s Kim Kendrick in the statement. |
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Sam Garcia worked in mortgage lending for twenty years prior to becoming publisher of MortgageDaily.com. e-mail:Â mtgsam@aol.com |
