FOIA:
Fair Lending Referrals

Type of credit product:

• 10 involved residential real estate loan transactions;

• 24 involved consumer loan transactions; and

• 3 involved both residential real estate and consumer loan transactions.

• In 31 cases, after reviewing and agreeing with the OCC's findings, DOJ and/or HUD asked the OCC to resolve the violations administratively.

• One case was simultaneously resolved through an administrative consent order between the bank and the OCC and a court-approved consent decree between the bank and DOJ.

• Two cases resulted in consent orders to resolve DOJ complaints filed simultaneously with the consent orders.

• One case was resolved through a settlement that was reached after DOJ filed suit.

• One case was returned by DOJ for administrative resolution by the OCC, which forwarded it to the Federal Reserve for administrative resolution due to the bank's conversion from a national to a state charter while the case was pending.

• One case was resolved by HUD.

• Three banks were found in violation of the Fair Housing Act and ECOA for denying black borrowers loans due to less favorable treatment during the underwriting process than afforded similarly situated white borrowers.

• Three banks were found in violation of the Fair Housing Act and ECOA for charging black or Native American borrowers higher prices for loans than similarly situated white borrowers.

• The first involved a bank found in violation of ECOA and the Fair Housing Act for denying a Hispanic borrower a loan, but approving less qualified, similarly situated white borrowers.

• The other case of national origin discrimination involved a bank that offered a Spanish language credit card application. Persons who used the Spanish language application were held to more difficult underwriting standards and were offered lower lines of credit than persons using the English language application; Spanish language applicants also were excluded from certain credit card promotions. In documentation provided by the bank, the bank designated "Hispanic" as one of the groups to be excluded from some promotions.

• A bank was found to hold black, white, and Hispanic customers to much more stringent underwriting standards for home purchase loans than Asian applicants.

• A bank was found to have offered preferential credit terms to members of a tribe and employees of businesses owned by tribal members.

• One bank was found in violation of the Fair Housing Act and ECOA after the bank's chairman made blatantly discriminatory comments about the creditworthiness of past and potential minority borrowers to a reporter who then quoted the statements in a newspaper.

• One bank was found in violation of ECOA for sending applicants, who used its Spanish-language application for a private label credit card, through a different credit scorecard than the one through which it sent those who used the English-language application.

• One bank offered a free line of credit/overdraft feature to customers age 60 or older. (ECOA permits such favorable treatment only for persons aged 62 or over.)

• One bank was found in violation of ECOA for using an "unvalidated" credit scoring system which took into account the age of the applicant.

• One bank was found in violation of ECOA for assigning lower credit limits on credit cards to persons under the age of 25.

• Two banks illegally required co-signers for younger borrowers even though they were as well qualified as older borrowers.

• Three banks were found in violation of ECOA for offering favorable terms on loans to individuals age 50 and age 55 or over. (ECOA permits such favorable treatment only for persons aged 62 or over.)

• One bank based their decision to extend or deny credit to applicants with inadequate credit scores on which of three age groups they belonged to (i.e., 18-25 years old, 26-54 and 55 and older). The result was that they treated individuals age 55 or older more favorably.

• One bank violated ECOA when it discouraged and denied mortgage loan applications for properties located in senior housing developments.

• One bank offered discounts on mortgage fees and consumer loan interest rates for customers who maintained minimum account balances. The bank did not require persons 55 and older to maintain minimum account balances in order to receive the loan discounts.

• One bank utilized more stringent underwriting criteria for applicants 25 years old or younger.

• A bank was found in violation of ECOA for selectively failing to consider "protected income." Specifically, the bank did not include unmarried, female applicants' "other" income when evaluating these applicants' qualifications but included such income of male or married applicants.

• A bank was found in violation of ECOA and the Fair Housing Act for denying a home construction loan to a female applicant because her income consisted of alimony and child support. The bank had not attempted to verify the reliability of the income, and had routinely counted unverified income claimed by male applicants.

• The bank was found in violation of the Fair Housing Act for instructing its appraisers to discount the value of properties located in family mobile home parks.

• All ten cases involved violations of ECOA because the banks treated unmarried co-applicants less favorably than married co-applicants in the underwriting of their applications.

Eight of the eleven violations involving race and/or national origin were based on evidence derived from comparative file review, which was also the case for 11 of the 21 involving other prohibited bases. In the cases not based on comparative file review, the evidence consisted of written policies or oral statements indicating that the bank considered prohibited factors.