WASHINGTON — A Virginia mortgage lender has agreed to pay $140,000 in compensation and revise its pricing policies to settle a lawsuit alleging that it discriminated against minority borrowers, the Justice Department said Friday.
C&F Mortgage Corp., a subsidiary of the $901.3 million-asset Citizens & Farmers Bank in West Point, Va., charged greater interest rate markups and gave lesser discounts on home mortgage loans made to African-American and Hispanic borrowers in violation of fair lending laws, the complaint alleges.
The Federal Deposit Insurance Corp. referred the case to the Justice Department's Civil Rights division, which filed the suit.
"The FDIC is committed to ensuring its supervised banks and their subsidiaries comply with fair lending laws," Mark Pearce, director of the FDIC's division of depositor and consumer protection, said in a press release. "Banks must effectively monitor their subsidiaries to avoid allowing impermissible discrimination to occur."
According to court documents, in 2007, C&F used rate sheets to calculate a standard interest rate for borrowers based on objective factors related to the borrower's risk. But the company gave employees broad discretion to charge more or less than the standard rates, without having objective criteria in place to set the so-called overages and underages.
The Justice Department claimed this policy had a disparate impact on African-American and Hispanic borrowers, according to a press release.
Larry Dillon, the bank's president and CEO, denied that the company treated anyone unfairly.
"Although we strongly disagree with the alleged findings, we just determined that we're better off to devote our resources to running our various companies and not spending it in the court room," Dillon said.
