FOR IMMEDIATE RELEASE CR WEDNESDAY, OCTOBER 18, 1995 (202) 616-2765 TDD (202) 514-1888 OHIO MORTGAGE COMPANY AGREES TO COMPENSATE AFRICAN AMERICANS CHARGED HIGHER PRICES FOR HOME MORTGAGE LOANS THAN WHITES WASHINGTON, D.C. -- A Columbus mortgage company will compensate African Americans who paid higher prices for home mortgage loans than equally qualified whites in the Cleveland area, under an agreement reached today with the Justice Department. The Justice Department first began reviewing the lending practices of the mortgage company in August 1994. Under the settlement, reached with the Justice Department, the Huntington Mortgage Company will set up a $420,000 compensation fund for African Americans, implement new monitoring and oversight systems, and change its policies to ensure uniform pricing without regard to race. In a complaint, filed along with the settlement in U.S. District Court in Cleveland, the Justice Department alleged the mortgage company engaged in a pattern of racial discrimination in the pricing of home mortgage loans in violation of the Fair Housing Act and the Equal Credit Opportunity Act. Assistant Attorney General for Civil Rights, Deval L. Patrick claimed that the mortgage company charged African Americans higher up-front fees -- often called "overages" -- for home mortgage loans than similarly-situated white borrowers. The alleged discriminatory practices occurred during a two-year period ending in September 1993. Generally, an "overage" refers to certain fees, other than the interest rate, paid by the borrower in excess of any minimum price set by a financial institution. Many loan officers have the discretion to charge a fee higher than the minimum; any amount obtained above the minimum price is an "overage". Loan officers typically receive some or all of the excess fees that they charge. It is not commonly known that such fees are negotiable. "Banks must be responsible for overseeing employees who set the actual prices paid for mortgage loans products," said Patrick. "Credit is the lifeblood of economic survival and should never be jeopardized based on race." The Justice Department estimates that approximately 117 African Americans were charged prices higher than the average price paid by white borrowers. Patrick noted that the disparities in the overages did not occur by chance and cannot be explained by differences in the borrowers' loan qualifications or other factors unrelated to race. Overages, as used by Huntington, are not related to risk. The settlement must still be approved by the court. # # # 95-540