SunTrust Mortgage, Inc. [corporate website] agreed [press release] on Thursday to a $21 million settlement with the US Department of Justice (DOJ) [official website] for discrimination in the pricing of mortgage loans. DOJ had filed a suit against the company for discriminating against borrowers based on race and national origin rather than on risk. The company allegedly engaged in the unlawful practice between 2005 and 2009 through SunTrust Mortgage's regional retail offices and national network of mortgage brokers. In addition to the settlement amount, the company is required to adopt policies that would prevent discrimination in the future. The agreement came after a two-and-a-half year investigation by the DOJ that reviewed more than 800,000 residential mortgage loans given out during the four-year period. Assistant Attorney General for the Civil Rights Division Thomas Perez [official profile] noted that Thursday's settlement is the second largest fair lending settlement [press release] in the department's history. He added that discrimination should be abolished by the private entities rather than the government compelling them to do so:
While the federal government must be a credible deterrent to those who would chose to violate our fair lending laws, the best policing is often policing that comes from within. That work is vital to ensuring fair and equal treatment for borrowers. And the success of thoughtful and comprehensive compliance work and attention to fair lending is reflected in the fact that the vast majority of lenders are not violating the law. That is why I believe that SunTrust should be commended for implementing strong fair lending policies.The settlement agreement was filed in federal court in Richmond, Virginia and is subject to court approval.
In December Bank of America (BOA) [corporate website] agreed to a $335 million settlement [JURIST report] for discrimination by its subsidiary, Countrywide Financial, against Hispanic and African-American home buyers. The DOJ filed a complaint against BOA alleging that Countrywide engaged in discriminatory practices, charging minority borrowers higher fees and interest rates and steering them into sub-prime mortgages based not on their creditworthiness, but rather on their race or national origin.