ATTORNEY GENERAL CUOMO OBTAINS APPROXIMATELY $1 MILLION FOR VICTIMS OF GREENPOINT’S DISCRIMINATORY LENDING PRACTICES
Approximately 270 African-American and Latino Borrowers Have Received Restitution
Cuomo Continues to Investigate the Pricing Practices of Several Mortgage Brokers Who Did Substantial Business with GreenPoint Mortgage Customers
NEW YORK, NY (July 16, 2008) - Attorney General Andrew M. Cuomo today announced that his office has issued more than $900,000 in restitution to approximately 270 African-American and Latino borrowers who experienced discriminatory lending practices by GreenPoint Mortgage. Further, the office is proceeding with its investigation into potential discriminatory pricing by various mortgage brokers that did substantial business with GreenPoint. Greenpoint is a subsidiary of Capital One Financial Corporation.
The restitution comes from a groundbreaking fair lending agreement reached between the Attorney General’s office and GreenPoint totaling approximately $1 million. Cuomo concluded that these minority borrowers paid more for GreenPoint loans arranged by mortgage brokers than similarly-situated white customers. GreenPoint has stopped making residential mortgage loans.
“No business should even think about basing prices on a customer’s skin color, ethnicity, or national origin,” said Attorney General Cuomo. “In this case, we identified discriminatory practices and obtained restitution for hundreds of minority New Yorkers. Discrimination is not just immoral, it’s illegal. There are clearly defined laws against discrimination and I will make sure that the full powers of my office will come down on any entity that does not follow them.”
The Attorney General’s office initiated an inquiry into GreenPoint after reviewing Home Mortgage Disclosure Act (HMDA) data showing that GreenPoint’s African-American and Latino customers were more likely than white customers to receive high-priced loans in New York. The Attorney General’s office commissioned expert statistical analyses to determine whether these pricing differences could be explained by legitimate factors, such as borrower credit scores. Based on these analyses, the Attorney General’s investigation concluded that, controlling for such factors, African-American and Latino borrowers still paid more than similarly-situated white borrowers for loans arranged by mortgage brokers.
The Attorney General’s office found that the racial and ethnic pricing disparities were largely due to differences in fees received by GreenPoint’s brokers for arranging loans. These fees, which are components of the interest rate (APR) that customers pay, are left largely to the discretion of the broker. The investigation found that certain mortgage brokers throughout New York State collected far more compensation for loans made to African-American and Latino customers than to white customers. That resulted in minorities sometimes paying thousands of dollars more for each loan.
The settlement requires GreenPoint to:
• Pay approximately $1 million in restitution to certain African-American and Latino customers in New York who received loans between 2004 and 2006 from brokers who charged African-American and Latino customers more in fees than similarly-situated white GreenPoint customers. To date, the Attorney General has distributed over $900,000 to borrowers. The remaining funds will be distributed to not-for-profit organizations that provide consumer financial education in New York.
• Take actions against specific brokers whose pricing practices contributed to the racial and ethnic disparities found, enhance monitoring of broker conduct, and impose stringent remedial measures against brokers who unjustifiably charge African-American and Latino customers higher prices.
Cuomo continued, “We believe there is an industry-wide problem in which African-American and Latino borrowers are being charged higher prices. Following GreenPoint’s lead, responsible lenders should increase monitoring of their employees’ and brokers’ conduct, and take necessary steps to ensure fair lending practices.”
The Attorney General’s office is continuing the investigation into the pricing practices of several mortgage brokers who did substantial business with GreenPoint customers. GreenPoint cooperated throughout the case and set a model example by taking responsibility and providing restitution for the acts of the loan brokers it dealt with.
Cesar Perales, President and General Counsel of the Puerto Rican Legal Defense and Education Fund said, “I applaud the Attorney General’s office for extending its investigation and continuing to prevent this kind of unfair and illegal practice. These discriminatory lending practices destroy the dream many Latinos have of owning their own homes.”
Bryan D. Hetherington, Chief Counsel of the Empire Justice Center said, “Charging higher fees based on race or ethnicity is a blatant injustice that cannot be tolerated in New York State. Our diverse population deserves to be afforded equal opportunities without any disparity when looking to purchase a home. Attorney General Cuomo’s investigation to ensure that civil rights are upheld in this segment of the mortgage industry will benefit New Yorkers across the state.”
Bertha Lewis, Executive Director of ACORN said, “We must continue to take action against lenders that discriminate against home buyers based on the color of their skin or background. Attorney General Cuomo's investigation strives to put an end to these abusive practices and we are proud to partner with his office in this ongoing effort.”
Mortgage brokers exercise much discretion in the fees they charge and the type of mortgage products they offer to customers. The Attorney General’s office urges all customers to shop around when looking for a mortgage loan to avoid being charged excessive fees or placed in high-cost loans that do not meet their needs.
Anybody who believes they have been the victim of discrimination or knows of discriminatory business practices are urged to call the Attorney General’s toll-free hotline at (800) 771-7755.
More information about what to do when shopping for a loan can be found at www.oag.state.ny.us.
The case was handled by Assistant Attorney Generals Jeffrey K. Powell and Vilda Vera Mayuga of the Civil Rights Bureau.
