The Consumer Financial Protection Bureau (CFBP) on Wednesday filed a lawsuit against Townstone Financial Inc., a Chicago-based nonbank retail-mortgage creditor.
CFPB’s complaint alleges that Townstone violated the Equal Credit Opportunity Act (ECOA) and Regulation B by engaging in discriminatory mortgage-lending practices and that those violations also constituted violations of the CFPA, the Consumer Financial Protection Act.
Specifically, the suit alleges that, from 2014 through 2017, Townstone drew almost no applications for properties in African-American neighborhoods located in the Chicago-Naperville-Elgin Metropolitan Statistical Area (Chicago MSA) and few applications from African Americans throughout the Chicago MSA.
According to the CFPB’s complaint, Townstone performed acts such as making statements during its weekly radio shows and podcasts through which it marketed its services that illegally discouraged prospective African-American applicants from applying to Townstone for mortgage loans.
The creditor is also accused of illegal redlining by engaging in acts or practices that discouraged prospective applicants living in African-American neighborhoods in the Chicago MSA from applying to Townstone for mortgage loans.
The complaint also alleges that the creditor engaged in acts or practices that discouraged prospective applicants living in other areas from applying to Townstone for mortgage loans for properties located in African-American neighborhoods in the Chicago MSA.
The CFPB’s complaint seeks an injunction against Townstone, as well as damages, redress to consumers, and the imposition of a civil money penalty.
HousingWire has reached out to Townstone for comment.
Founded in 2002, Townstone is owned by Barry Sturner, who serves as its CEO.
According to an August 2019 article by The Title Report, Townstone Financial had advertised on a number of different radio stations in the Chicago market, including three AM stations. The article stated: “At issue in the CFPB’s investigation, however, are Townstone’s advertising on news talk station AM-560 and the company’s own podcast, which is similar to the radio show.”
That article went on to quote a tweet from Sturner in which he reportedly tweeted at President Donald Trump through the Townstone account.
“We discussed the crime on the south side of Chicago on our public radio which you too have discussed, and CFPB said that statement was also against fair lending act laws,” he wrote. “Need your help, please! 100% factual. Cant state facts any longer in America unless NY Times agrees?”