The CFPB and Department of Justice recently filed a joint complaint against National City Bank—now owned by PNC Bank—for allegedly charging higher prices on mortgages to black and Hispanic borrowers than to similarly situated creditworthy white borrowers.
“Borrowers should never have to pay more for a mortgage loan because of their race or national origin,” CFPB Director Richard Cordray said. “Today’s enforcement action puts money back in the pockets of harmed consumers and makes clear that we will hold lenders accountable for the effects of their discriminatory practices.”
Additionally, the agencies filed a proposal to settle the complaint for $35 million, to be paid by National City back to affected borrowers. According to the CFPB, between 2002 and 2008, 76,000 black and Hispanic borrowers paid extra costs as a result of the practice.
The CFPB and DoJ initiated the investigation in 2011, alleging that the bank, which allowed its loan officers and brokers the discretion to set rates and fees, compensated officers and brokers using extra costs paid by consumers.
Cleveland-based National City was acquired in October 2008 by PNC Financial in the midst of the financial crisis.