PrimeLending settles discrimination suit for $2 million
PrimeLending, a lending unit of Texas-based PlainsCapital Corp., agreed to pay the federal government $2 million Wednesday to settle allegations of discriminatory lending. According to the court filing, filed with Northern District of Texas Dallas Division court, the Federal Reserve System found that PrimeLending charged African-Americans higher loan prices and interest rates than white borrowers with similar credentials. The difference is in price between the two races, the filing said, "cannot be explained fully by factors unrelated to race." The loans identified in the filing were originated between 2006 and 2009. The Fed found that the interest rates PrimeLending was offering to African-American on fixed-rate mortgages were 11 to 14 basis points higher than were being offered to white borrowers. Interest rates on mortgages backed by the Federal Housing Administration and Department of Veteran Affairs were found to be 5 to 11 basis points higher for African-Americans and whites. The Fed began its investigation into PrimeLending's practices in 2008 to assure the lender was in compliance with FHA and Equal Credit Opportunity Act guidelines. In 2009, PrimeLending was one of the 20 largest lenders in the FHA loan program, originating more than 30,000 loans worth more than $5.5 billion in that year alone. Carol Towne, PrimeLending's chief marketing officer, said in an official statement Wednesday the company is "pleased that an agreement has been reached and the issue resolved. The agreement is not an admission of liability, and PrimeLending denies any wrongdoing." Write to Christine Ricciardi.