$21 Million Fair Lending Settlement Between SunTrust, DOJ
The U.S. Department of Justice (DOJ) recently settled a fair lending lawsuit with SunTrust Mortgage, Inc. for $21 million. SunTrust Mortgage is one of the nation’s largest mortgage lenders, issuing as many as 200,000 mortgage loans per year. The size of this settlement is second only to the landmark $335 million settlement with Countrywide.
The SunTrust Mortgage fair lending investigation started with a referral to the DOJ from the Federal Reserve. The complaint against SunTrust Mortgage alleges that systemic discrimination took place over a five-year period impacting more than 20,000 African American and Hispanic families. African Americans and Hispanics with strong credit paid more for a loan than similarly qualified white borrowers based solely on race.
According to the DOJ, while SunTrust did set loan prices on objective credit-related criteria, loan officers and brokers were allowed to deviate from those prices without regard to borrower risk. Instead, they used their subjective discretion to set prices higher for African American and Hispanic borrowers. In addition, SunTrust provided incentive for discrimination by sharing its discriminatory charges with mortgage loan officers and brokers who could obtain higher prices from African American and Hispanic borrowers. Finally, SunTrust did not require loan officers or brokers to document the reasons for the pricing adjustments not based on risk.
It is worthwhile to note that DOJ did commend SunTrust Mortgage for taking constructive steps in improving fair lending even before the DOJ’s investigation was complete.
There is concrete proof that DOJ has stepped up its fair lending enforcement. From 1993 to 2008, DOJ filed or resolved 37 lending matters. In the last two and a half years, the department has filed or resolved 18 lending matters.
Access the SunTrust Consent Order.