A unit of PlainsCapital Corp. has agreed to pay $2 million to settle a Justice Department complaint it discriminated against black borrowers by overcharging them on loans between 2006 and 2009.
The settlement comes amid the Dallas company's renewed plans to go public. It re-registered for an initial public offering in August, seeking proceeds to redeem preferred stock and repay debt, after postponing its IPO in November 2009 because of market volatility.
The government alleged the company's PrimeLending mortgage-lending operation charged black borrowers higher interest rates than similarly situated white borrowers for prime fixed-rate home loans and those guaranteed by the Federal Housing Administration and Department of Veteran Affairs.
The Justice Department contends PrimeLending "gave its employees wide discretion to increase their commissions" by adding rate-increasing "overages" to loans, which had a disparate impact on black borrowers. Overages have long been seen as means by which lending discrimination can occur.
PrimeLending didn't have monitoring in place to ensure it complied with fair lending laws, even as it rapidly increased its lending operations during the time the alleged violation occurred, the department said.
The settlement also requires PrimeLending to have loan pricing policies, monitoring and training to prevent future discrimination.
