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Case Name United States v. GFI Mortgage Bankers, Inc. FH-NY-0018
Docket / Court 1:12-cv-02502 ( S.D.N.Y. )
State/Territory New York
Case Type(s) Fair Housing/Lending/Insurance
Attorney Organization U.S. Dept. of Justice Civil Rights Division
Case Summary
On April 2, 2012, the United States filed a lawsuit under the Fair Housing Act, 42 U.S.C. §§ 3601-3619, and the Equal Credit Opportunity Act, 15 U.S.C. § 1691, against New York-based correspondence mortgage lender GFI Mortgage Bankers, Inc., in the U.S. District Court for the Southern District ... read more >
On April 2, 2012, the United States filed a lawsuit under the Fair Housing Act, 42 U.S.C. §§ 3601-3619, and the Equal Credit Opportunity Act, 15 U.S.C. § 1691, against New York-based correspondence mortgage lender GFI Mortgage Bankers, Inc., in the U.S. District Court for the Southern District of New York. The United States, represented by the Department of Justice Civil Rights Division, asked the court for injunctive and monetary relief. It alleged that between 2005 and 2009, GFI's loan officers engaged in a pattern and practice of charging African-American and Hispanic borrowers in New Jersey and New York higher interest rates and higher fees for residential mortgage loans than they charged similarly situated white borrowers. It further alleged that because of these disparities, African Americans and Hispanics paid or would need to pay between $4,000 and $5,000 more than similarly situated white borrowers over the first four years of their loans' terms, and over $20,000 more over the loans' full terms. The Department of Justice received this case as a referral from the Department of Housing and Urban Development.

GFI moved to dismiss the case, arguing that conduct that has a disparate impact (but no discriminatory intent) is not actionable under the Fair Housing Act or the Equal Credit Opportunity Act. On August 27, 2012, after Judge Katherine Forrest expressed skepticism of the defendants' argument in a scheduling order, the parties entered into a Consent Order. GFI admitted that statistical analyses of data from 2005-2009 show its loan officers charged African-American and Latino borrowers higher discretionary fees than similarly situated white borrowers. It also admitted that it provided financial incentives for its loan officers to use discretion and charge borrowers fees unrelated to their credit characteristics.

The consent order requires GFI to pay $3.5 million to damaged African-American and Hispanic borrowers, and to pay a $55,000 civil penalty to the United States. GFI must implement specific policies to prevent pricing discrimination and limit loan officers' discretion in the future, hire senior and managerial staff to ensure compliance with these policies, and develop a fair lending monitoring program that will allow it, on a quarterly basis, to identify and correct for lending disparities. The order requires GFI to submit these policies for approval to the Department of Justice by the end of October 2012. After the United States approves the new policies, GFI must hire an independent third-party to provide fair lending training to all of its employees engaged in the loan origination business. The consent decree is scheduled to last for 4 and a half years.

Benjamin Clark - 10/18/2012


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Issues and Causes of Action
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Issues
Constitutional Clause
Commerce Power
Content of Injunction
Develop anti-discrimination policy
Discrimination Prohibition
Monitoring
Provide antidiscrimination training
Defendant-type
Bank or credit provider
Discrimination-area
Lending
Discrimination-basis
National origin discrimination
Race discrimination
General
Disparate Treatment
Housing
Pattern or Practice
Predatory lending
Racial segregation
National Origin/Ethnicity
Hispanic
Plaintiff Type
U.S. Dept of Justice plaintiff
Race
Black
Causes of Action Fair Housing Act/Fair Housing Amendments Act (FHAA), 42 U.S.C. §§ 3601 et seq.
Equal Credit Opportunity Act (ECOA), 15 U.S.C. § 1691
Defendant(s) GFI Mortgage Bankers, Inc.
Plaintiff Description United States
Indexed Lawyer Organizations U.S. Dept. of Justice Civil Rights Division
Class action status sought No
Class action status granted No
Prevailing Party Plaintiff
Public Int. Lawyer Yes
Nature of Relief Damages
Injunction / Injunctive-like Settlement
Source of Relief Settlement
Form of Settlement Court Approved Settlement or Consent Decree
Order Duration 2012 - 2017
Case Closing Year 2012
Case Ongoing No
Additional Resources
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Case Studies Insurer Must Pay $100.5 Million in Redlining Case
The New York Times
Written: Oct. 27, 1998
By: Joseph B. Treaster
[ Detail ] [ External Link ]

  Nationwide Settles Virginia Redlining Suit
Property Casualty 360
Written: May. 06, 2000
By: Amanda Levin
[ Detail ] [ External Link ]

  The Origins of Fair Lending Litigation
Written: Dec. 04, 2008
By: Andrew Nash (Washington University in St. Louis)
[ Detail ] [ PDF ] [ External Link ]

Docket(s)
1:12−cv−02502 (S.D.N.Y.) 08/27/2012
FH-NY-0018-9000.pdf | Detail
PACER [Public Access to Court Electronic Records]
General Documents
Complaint 03/30/2012
FH-NY-0018-0002.pdf | Detail
Document Source: PACER [Public Access to Court Electronic Records]
Justice Department Alleges GFI Mortgage Bankers Engaged in Illegal Lending Discrimination 04/02/2012
FH-NY-0018-0004.pdf | Detail
Re: United States v. GFI Mortgage Bankers, Inc. 08/23/2012
FH-NY-0018-0003.pdf | Detail
Document Source: PACER [Public Access to Court Electronic Records]
Consent Order 08/27/2012 (S.D.N.Y.)
FH-NY-0018-0001.pdf | Detail
Document Source: PACER [Public Access to Court Electronic Records]
Justice Department Reaches Lending Discrimination Settlement with GFI Mortgage Bankers, Inc. 08/28/2012
FH-NY-0018-0005.pdf | Detail
Judges Forrest, Katherine Bolan (S.D.N.Y.)
FH-NY-0018-0001 | FH-NY-0018-0003 | FH-NY-0018-9000
Monitors/Masters None on record
Plaintiff's Lawyers Barnea, Jean-David (New York)
FH-NY-0018-0001 | FH-NY-0018-0002 | FH-NY-0018-0003 | FH-NY-0018-9000
Bharara, Preetinder S. (New York)
FH-NY-0018-0001 | FH-NY-0018-0002 | FH-NY-0018-0003
Dougherty , Burtis M. (District of Columbia)
FH-NY-0018-0001 | FH-NY-0018-9000
Holder, Eric H. Jr. (District of Columbia)
FH-NY-0018-0002
Kennedy, David J. (New York)
FH-NY-0018-0001 | FH-NY-0018-0002 | FH-NY-0018-0003 | FH-NY-0018-9000
Majeed, Sameena Shina (District of Columbia)
FH-NY-0018-0001 | FH-NY-0018-0002 | FH-NY-0018-9000
Mosteller, Daniel P. (District of Columbia)
FH-NY-0018-0001
Perez, Thomas E. (District of Columbia)
FH-NY-0018-0001 | FH-NY-0018-0002
Rosenbaum, Steven H. (District of Columbia)
FH-NY-0018-0001 | FH-NY-0018-0002
Seward, Jon M. (District of Columbia)
FH-NY-0018-0001 | FH-NY-0018-0002
Defendant's Lawyers Jensen, Kirk D. (District of Columbia)
FH-NY-0018-0001 | FH-NY-0018-9000
Louis, Andrew R. (District of Columbia)
FH-NY-0018-0001 | FH-NY-0018-9000
Reilly, Joseph John (District of Columbia)
FH-NY-0018-9000
Sandler, Andrew L. (District of Columbia)
FH-NY-0018-0001
Other Lawyers None on record

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