On November 1, the CFPB filed a proposed stipulated final judgment and order against a nonbank retail-mortgage creditor and broker based in Chicago, which, if approved by the court, would prohibit the defendant from engaging in any acts or practices that violate the ECOA in connection with offering or providing mortgage loans. It would also require the defendant to maintain a compliance management system, provide ongoing education and training for employees, and pay a $105,000 civil money penalty. In addition, the Bureau filed a stipulation of dismissal of its claim against the defendant’s cofounder, who was added in 2020 to an amended complaint in which the CFPB alleged he was the fraudulent transferee of more than $2.4 million from the defendant.
As previously covered by InfoBytes, the CFPB initiated its action against the defendant on July 15, 2020, in the U.S. District Court for the Northern District of Illinois, alleging that the defendant violated the ECOA, Regulation B and the CFPA. The complaint focused on numerous racially disparaging comments allegedly made by the defendant owner and employees on the company’s broadcasts. Allegedly, for years, the defendant received almost no mortgage applications for properties in majority-Black neighborhoods in the Chicago-Naperville-Elgin metropolitan statistical area and few applications from Black applicants.
Defendants filed a motion to dismiss the amended complaint on February 8, 2021, which the court granted on February 3, 2023. The Bureau appealed the dismissal of the case, and on July 11 the Seventh Circuit held that the ECOA prohibits not only outright discrimination against applicants for credit but also the discouragement of prospective applicants for credit. In reversing the district court’s decision, the Seventh Circuit remanded the case for further proceedings.
