CFPB, DOJ file discriminatory lending complaint against National City Bank
Bank will have to pay $35M to settle the issue
The Consumer Financial Protection Bureau continues to flex its enforcement arm, announcing Monday that the agency -- along with the Department of Justice -- filed a joint discriminatory lending complaint against National City Bank.
In the suit, the two agencies allege the bank’s loan officers charged African-American and Hispanic borrowers different prices on their mortgages when compared to white borrowers with similar credit histories, according to the CFPB.
The alleged violations occurred between the years 2002 and 2008.
As part of the complaint, the agencies want National City Bank through its successor bank PNC (PNC) to pay $35 million in restitution to minority borrowers harmed by the practices.
National City originated the loans in question through retail officers and independent mortgage brokers, the CFPB said. Between the years 2002 and 2008, National City originated more than one million loans through the retail channel and another 600,000 through independent brokers.
PNC acquired National City Bank in 2008 in the midst of the financial meltdown.
Under the Equal Credit Opportunity Act, creditors cannot use race and national origin as a basis for discriminating against loan applicants or for providing borrowers in similarly situated positions with differing loan terms.
The CFPB says National City used discretionary pricing, which gave originators the ability to vary the amounts minorities paid.
The regulators allege more than 76,000 minority borrowers paid higher costs on their mortgages.
The CFPB and DOJ are working in tandem to pursue fair lending cases after announcing a partnership on this issue back in 2012.