Madison, Wisconsin-based Fairway Mortgage Corporation has agreed to a nearly $10 million settlement of redlining charges brought by the Department of Justice (DOJ) and the Consumer Financial Protection Bureau (CFPB), with the company claiming the probe into its lending and the timing of the settlement announcement were politically motivated.
In a press statement, Fairway noted that the CFPB began to investigate the company’s mortgage lending activities in Birmingham, Alabama, on “the first full day after the Biden Administration took office” and complained the news of the settlement was published “filed days before the impending Presidential election.” Fairway also asserted that despite a multi-year investigation, “the government agencies did not identify any evidence of redlining or other discrimination by Fairway. Rather, the government agencies relied on a quota analysis to allege that Fairway was not meeting the needs of residents of majority-Black census tracts, in contravention of the US Supreme Court’s 2023 decisions regarding affirmative action.”
The DOJ and CFPB alleged that Fairway concentrated all its retail loan offices in majority-white areas, directed less than 3% of its direct mail advertising to consumers in majority-Black areas, and for years discouraged homeownership in majority-Black areas by generating loan applications at a rate far below its peer institutions. The DOJ and CFPB claimed Fairway violated the Fair Housing Act, Equal Credit Opportunity Act, and Consumer Financial Protection Act.
The settlement requires Fairway to provide $7 million for a loan subsidy program to offer affordable home purchase, refinance, and home improvement loans in Birmingham’s majority-Black neighborhoods, invest an additional $1 million in programs to support that loan subsidy fund, and pay a $1.9 million civil penalty to the CFPB’s victims relief fund.
“This settlement, and the over $150 million in relief the Justice Department has secured for communities across the country through our Combating Redlining Initiative, will help to ensure that future generations of Americans inherit a legacy of home ownership that they too often have been denied,” said Attorney General Merrick B. Garland in a statement. “This case is a reminder that redlining is not a relic of the past, and the Justice Department will continue to work urgently to combat lending discrimination wherever it arises and to secure relief for the communities harmed by it.”
Fairway stated it was “disappointed” with the outcome of the investigation but denied the agencies’ charges of racial discrimination.
“Fairway vigorously defended itself against the government agencies’ allegations and continues to deny that the company engaged in any discriminatory behavior,” said Fairway in its press statement. “Fairway also maintains strong disagreement with the government agencies’ legal and statistical approach to identifying potential discrimination. However, to resolve the matter and curb the further expenditure of resources, Fairway determined that a settlement with the Bureau and the DOJ would be the most appropriate solution.”
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