GFI Mortgage Bankers will pay $3.55 million as part of last week’s settlement between the lender and the U.S. Department of Justice, according to national law firm Ballard Spahr.

Beyond the settlement, the lawfirm adds that the DOJ is ordering GFI to develop a program to monitor loans for interest rate and fee disparities — and to take corrective action if the monitoring shows statistically significant disparities.

Furthermore, the consent order with GFI means the originator must put limits on pricing discretion it provides its employees, which includes requirements to justify cases where prices are higher in individual loans.

The settlement, which also carries an additional $55,000 civil penalty, ended a probe into allegations the lender violated the Fair Housing Act and the Equal Credit Opportunity Act by charging minority borrowers more for loans when compared to similarly situated nonminority borrowers.

“The settlement means that this case will not be a test of the DOJ's attempt to use disparate impact evidence to establish that the defendant had engaged in intentional discrimination as alleged in the complaint,” Ballard Spahr noted.

The complaint charged that there was a significant disparity between the interest rates paid by various groups of borrowers. The disparities occurred because of a pricing policy allowing loan officers to exercise discretion in setting interest rates and a compensation policy that rewarded the them for originating loans at higher rates.

In addition to payment of monetary relief, the settlement requires GFI to adopt fair lending policies that include limits on any pricing discretion given to GFI employees and requirements for justifying pricing that exceeds that discretion or deviates from a standard fee schedule, Ballard Spahr said.

GFI must also develop a program to monitor loans it originates for interest rate and fee disparities and take corrective action if the monitoring shows statistically significant disparities.

jhilley@housingwire.com