On September 26, 2013, the United States of America filed a lawsuit in the Southern District of California against Plaza Home Mortgage, Inc., under the Fair Housing Act and the Equal Credit Opportunity Act. The Department of Justice alleged that the defendant discriminated against African American and Hispanic borrowers in its residential mortgage lending and sought declaratory judgment, injunctive relief, compensatory damages to all of the victims of the defendant's discriminatory policies, and a civil penalty.

This case was filed after years of monitoring by federal agencies. In 2009, the Federal Trade Commission ("FTC") determined that the defendant had substantial disparities in the rates given to minority versus non-Hispanic white borrowers. The FTC requested more information from the defendant, including loan data and the company's policies, and in 2011 the Department of Justice took over the investigation. The data obtained from the investigation showed that from 2006 through at least 2010, the defendant permitted its mortgage brokers to charge excessive fees beyond the fee caps to African American and Hispanic borrowers more frequently than white borrowers based solely on race and national origin. The defendant had a two-step process set in place where the first step determined whether the applicant satisfied objective criteria. The second step was more subjective and allowed mortgage brokers to charge fees with little checks on their discretion. The defendant did not set up objective criteria to guide the mortgage brokers in setting fees or interest rates. The disparities between the rates given to whites and minorities were prevalent in thousands of loans made in numerous states.

On October 1, 2013, the District Court (Judge Marilyn L. Huff) entered a consent order between the parties. Although the defendant did not admit to any pattern or practice of discrimination, the order enjoined the defendant from engaging in any discriminatory act or practice and subjected the defendant to monitoring. The defendant was also required to pay $3 million into a settlement fund to compensate those affected by its discrimination. The order was set to terminate after three years if the defendant had complied during that time period.

On September 28, 2016, the parties jointly moved to extend the consent decree by one month, which was the time that Plaza needed to achieve substantial compliance. The court granted this motion and on November 29, 2016, the parties moved to dismiss the case without prejudice.

Perry Miska - 03/10/2014
Elena Malik - 11/08/2017


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