IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NEW YORK
UNITED STATES OF AMERICA,
Plaintiff,
v.
CV 96 2279
FLEET MORTGAGE CORP.
Defendant.
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COMPLAINT
The United States of America alleges:
- The United States brings this action to enforce the
provisions of Title VIII of the Civil Rights Act of 1968
("Fair Housing Act"), as amended by the Fair Housing
Amendments Act of 1988, 42 U.S.C. §§ 3601-3619, and of the
Equal Credit Opportunity Act ("ECOA"), 15 U.S.C. §§ 1691-1691f.
- This court has jurisdiction of this action pursuant to 28
U.S.C. § 1345, 42 U.S.C. § 3614, and 15 U.S.C. § 1691(h) and
venue is appropriate pursuant to 28 U.S.C § 1391(c) and
1392(a).
- Defendant, Fleet Mortgage Corp., is incorporated under the
laws of the State of South Carolina, with its principal
place of business in Columbia, South Carolina. Fleet
Mortgage Corp. (hereinafter "Fleet" or "the lender") is the
successor to Fleet Real Estate Funding Corporation, the name
under which the defendant did business during the occurrence
of the events described in this Complaint. Fleet is a
subsidiary of Fleet Mortgage Group, Inc., which is in turn a
subsidiary of Fleet Financial Group, Inc., with its
principal place of business in Providence, Rhode Island.
Fleet Financial Group, Inc., is a bank holding company,
making it and all of its subsidiaries subject to the
regulatory supervision of the Federal Reserve Board.
- Fleet's business includes engaging in residential real
estate-related transactions and regularly extending credit
to persons. Fleet is a creditor as that term is defined by
section 702(e) of the ECOA, 15 U.S.C. § 1692a(e), and is,
therefore, subject to the requirements of the ECOA and its
implementing Regulation B, as amended, 12 C.F.R. Part 202,
in effect on or after March 23, 1977.
- Fleet is organized on a regional basis. Its Mid-Atlantic
Region includes branch offices in Westbury, New York, and in
Woodbridge, New Jersey. During the time period that is the
subject of this Complaint, these two branch offices had a
higher volume of African-American and Hispanic mortgage loan
applicants and borrowers than other offices in the lender's
Mid-Atlantic region.
- Fleet solicits applications for residential mortgage loans
primarily through its employees (loan officers and managers)
who work in the lender's branch offices. In conducting its
home mortgage loan operations, Fleet provides daily rate
sheets to its loan officers. Fleet uses the price sheets and
related information to inform its loan officers of both the
lender's minimum loan price that day for each loan product
and the extent to which the loan officers can earn incentive
commissions by persuading the borrower to agree to an above
minimum loan price (hereinafter referred to as "overages")
The policy and practice of allowing overages was instituted
no later than January 1, 1993, and remained in effect until
suspended by the lender in mid-1994.
- During the time period described in the preceding paragraph,
loan officers at Fleet's Westbury and Woodbridge offices
also were given the discretion (usually with the branch
manager's permission) to charge borrowers an amount that was
less than the daily minimum price on the lender's rate
sheet. This practice is referred to herein as granting
"underages."
- In 1994, the Federal Reserve Bank of Boston conducted an
investigation of the lending practices of Fleet to evaluate
its compliance with, among other laws, the Fair Housing Act
and the Equal Credit Opportunity Act. Based on information
gathered in its investigation, the Federal Reserve
determined that in its Westbury and Woodbridge branches,
Fleet may have engaged in a pattern or practice of
discrimination on the basis of race and national origin in
the loan prices charged to minority borrowers for
residential mortgage loans. On September 7, 1995, Federal
Reserve officials provided a summary of the agency's
findings concerning Fleet's lending practices to the United
States Department of Justice and thereafter supplied the
Department with the underlying data supporting those summary
findings.
- The defendant and its employees in the Westbury and
Woodbridge branches failed to implement the overages and
underages pricing policies without regard to race or
national origin. Beginning at the latest on January 1, 1993,
and continuing until at least June 30, 1994, Fleet imposed
overages on home mortgage loans more frequently (and granted
underages less frequently) for African-American and Hispanic
borrowers than it did for similarly situated white Anglo
borrowers. By means of these differences in frequency of
overages and underages, the lender charged African-American
and Hispanic borrowers higher prices for home mortgage loans
than it charged similarly situated white Anglo borrowers.
- The difference in overage and underage frequency and the
difference in price between the loans made to African-American and Hispanic borrowers and those made to similarly
situated white Anglo borrowers could not have occurred by
chance and cannot be explained by differences in the
borrowers' loan qualifications or other factors unrelated to
race or national origin.
- Fleet has subjected African-American and Hispanic customers
of its Westbury and Woodbridge branches to discriminatory
treatment by intentionally subjecting them to terms and
conditions for home mortgage loans that resulted in those
customers paying more for their loans than similarly
situated white Anglo Customers.
- The defendant's policies and practices, as described in
paragraphs 9 through 11, constituted:
- A pattern or practice of resistance to the full enjoyment of rights secured by the Fair Housing Act, as amended, 42 U.S.C. §§ 3601-3619, and the Equal Credit Opportunity Act, 15 U.S.C. §§ 1691-1691f; and
- A denial to a group of persons of rights granted by the Fair Housing Act, as amended, that raises an issue of
general public importance.
This pattern or practice and denial of rights occurred
between January 1, 1993, at the latest, and June 30, 1994, at the earliest.
- Specifically, the pattern or practice, as alleged herein,
constituted:
- discrimination on the basis of race or national origin in making available residential real estate-related transactions in violation of Section 805 of the Fair Housing Act, 42 U.S.C. § 3605(a);
- discrimination on the basis of race or national origin in the terms, conditions, or privileges of the
provision of services or facilities in connection with
the sale or rental of dwellings, in violation of
Section 804(b) of the Fair Housing Act, 42 U.S.C. §
3604(b); and
- discrimination against applicants with respect to
credit transactions, on the basis of race or national
origin, in violation of the Equal Credit opportunity
Act, 15 U.S.C. § 1691(a)(1).
- Persons who have been victims of Fleet's discriminatory
policies and practices are aggrieved persons as defined in
42 U.S.C. § 3602(i) and the ECOA, and have suffered damages
as a result of the defendant's conduct as described herein.
- The discriminatory policies and practices of the defendant were intentional and willful, and were implemented with
deliberate disregard for the rights of African Americans or
Hispanics.
WHEREFORE, the United States prays that the Court enter an ORDER that:
- Declares that the policies and practices of the defendant between 1993 and 1994 constitute a violation of Title VIII of the Civil Rights Act of 1968, as amended by the Fair Housing Amendments Act of 1988, 42 U.S.C. § 3601-3619, and the Equal Credit Opportunity Act, 15 U.S.C. §§ 1691-1691f;
- Enjoins defendant, its agents, employees, successors, and
all other persons in active concert or participation with
them, from discriminating on account of race or national
origin in any aspect of their home equity or mortgage
lending activities;
- Requires defendant to develop and submit to the Court for
its approval a detailed plan that: (a) remedies the vestiges
of defendant's discriminatory policies and practices; and
(b) ensures that future African-American or Hispanic
applicants will be treated in a nondiscriminatory manner
that does not differ materially from the treatment afforded
to white applicants;
- Awards such damages as would fully compensate the victims of defendant's discriminatory policies and practices for the
injuries caused by the defendant;
- Awards punitive damages to the victims of defendant's
discriminatory policies and practices; and
- Assesses a civil penalty against the defendant, in order to vindicate the public interest.
The United States further prays for such additional relief as the interests of justice may require.
JANET RENO
ATTORNEY GENERAL
DEVAL L. PATRICK
ASSISTANT ATTORNEY GENERAL
PUAL F. HANCOCK
Chief, Housing and Civil Enforcement Section
ALEXANDER C. ROSS (AR-2303)
HOWARD R. GRIFFIN (HG-4825)
Attorneys, Housing and Civil Enforcement Section
Civil Rights Division
U.S. Department of Justice
P.O. Box 65998
Washington, D.C. 20035-5998
(202) 307-2896
ZACHARY W. CARTER
UNITED STATES ATTORNEY FOR THE EASTERN DISTRICT OF NEW YORK
by
SANFORD M. COHEN (SC-6601)
Chief, Civil Rights Litigation
1 Pierrepont Plaza
16th Floor
Brooklyn, NY 11201
(718) 254-6249