On August 23, 2007, a Latino borrower filed a complaint in the U.S. District Court for the Central District of California against Chase Bank USA and JP Morgan Chase & Co, under the Equal Credit Opportunity Act, 15 U.S.C. § 1691 et seq. ("ECOA"), the Fair Housing Act, 42 U.S.C. § 3601 et seq. ("FHA"), and 42 U.S.C. § 1981. The plaintiff alleged racially discriminatory lending practices in connection with home mortgage loan he took out from Chase. Specifically, he alleged that Chase was engaged in both intentional and disparate impact discrimination through its development and implementation of mortgage pricing policies and procedures that resulted in less favorable loan conditions to non-white borrowers as compared to similarly situated white borrowers.

The case then went into mediation. In August 14, 2008, the parties entered a joint stipulation to dismiss JP Morgan as a defendant. On August 15, 2008, the Court (Judge Andrew Guilford) ordered that JP Morgan was to be dismissed without prejudice, but the plaintiff reserved a right to conduct discovery with respect to it.

On January 16, 2009, the plaintiff filed a first amended complaint. The complaint was a class action allegation, adding another two named plaintiffs, against Chase Bank USA. The amended complaint alleged that Chase engaged in practices that had a disparate impact on minorities (defined as any non-Caucasian minority). It was alleged that Chase developed mortgage pricing policies that provided financial incentives to its authorized loan officers, mortgage brokers and corresponding lenders to make subjective decisions to increase interest rate and charge additional fees to minority borrowers. That allegedly led to minorities receiving higher interest rates and costs than non-minority borrowers in a similar situation. The plaintiff sought injunctive, declaratory and equitable relief, and damages.

The parties eventually settled on March 10, 2010. Under the agreement, the parties sought to certify following class: "All African-American and Hispanic borrowers who, since August 23,2005, obtained a mortgage loan originated through Chase's wholesale channel." The minority borrowers that paid off their loans could claim either a $300 credit towards the closing costs of his or her next loan with Chase, or a check for $70. Existing non-delinquent borrowers could receive either a $300 credit, or a $90 check. Above borrowers, and delinquent borrowers, were entitled to "red carpet access" for loan modification services with dedicated 800 numbers, and dedicated personnel with fair housing and lending training. The "red carpet access" was to be in effect for 2 years from the date of the agreement. The defendant had to submit quarterly reports during that period to class counsel, as well as maintain a settlement website. The defendant agreed to pay $1,95 million in attorney's fees. Each class representative received $5,000.

On May 17, 2010, the Court ordered a preliminary approval of the settlement agreement, pending a fairness hearing. On November 9, 2010, the Court issued a final judgment, approving the settlement agreement. The court certified the class above as a settlement class. The Court retained jurisdiction over the agreement for its duration.

Zhandos Kuderin - 07/22/2014


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