Bank allegedly charged black and Hispanic mortgage customers more; JP Morgan denied wrongdoing, saying prices were set by independent brokers
JP Morgan Chase agreed to pay $55m to settle charges that the bank discriminated against thousands of minorities seeking home loans by charging them higher rates and fees.
The decision came after US attorney Preet Bharara filed a complaint on Wednesday alleging that the USs biggest bank discriminated against at least 53,000 African American and Hispanic mortgage seekers between 2006 and 2009 in violation of the Fair Housing Act.
Minority borrowers were owed tens of millions of dollars in damages, the government said, because JP Morgan allowed them to be charged higher rates and fees than similarly situated white borrowers.
Until 2009, JP Morgan used a network of wholesale mortgage brokers to sell its loan applications. The bank could have, but failed, to better monitor its wholesale brokers to discourage discrimination, according to the complaint. Brokers were given the discretion to adjust pricing based on factors unrelated to borrower risk, the government alleged.
As a result, the average black borrower paid about $1,126 more over the first five years of an average loan of $191,100, while the average Hispanic borrower paid about $968 more on an average loan of $236,800.
Even when Chase had reason to know there were disparities, however, Chase did not act to determine the full scope of these wholesale pricing disparities, nor did it take prompt and effective action to eliminate those disparities, nor did it engage in adequate efforts to remedy the impact of those disparities upon the borrowers, the government charged in the lawsuit.
JP Morgan denied wrongdoing. Weve agreed to settle these legacy allegations that relate to pricing set by independent brokers, said the bank in a statement. We deny any wrongdoing and remain committed to providing equal access to credit.