A settlement has been reached over government allegations that National City Bank used discriminatory pricing on mortgage lending to minority borrowers.
National City is accused of charging higher prices on home loans to black and Hispanic borrowers than similarly creditworthy white borrowers.
Such practices violate the Equal Credit Opportunity Act, which prohibits creditors from discriminating against loan applicants on the basis of race or national origin.
The discrimination allegedly took place from 2002 until 2008, a period which reportedly saw more than 1.0 million retail mortgages originated and 0.6 million loans generated through the mortgage broker channel.
The announcement indicated that loan originators and mortgage brokers were given the discretion to price the loans while also being compensated for extra borrower-paid costs.
National City Corp. was acquired in the heat of the financial crisis during 2008 by The PNC Financial Services Group Inc.
PNC has agreed to pay $35 million to settle the charges. The funds will be distributed through a settlement administrator to more than 76,000 harmed black and Hispanic borrowers.
In addition to a proposed settlement filed Monday by the Consumer Financial Protection Bureau and the Department of Justice, a joint complaint was filed in a Pennsylvania federal court.
“Today’s action marks the first joint lawsuit brought in federal court by the CFPB and the DOJ to enforce federal fair lending laws,” the press release stated. “On Dec. 6, 2012, the CFPB and the DOJ signed an agreement that has facilitated strong coordination between the two agencies on fair lending enforcement, including the pursuit of joint investigations such as this one.”
