The Consumer Financial Protection Bureau (CFPB) is seeking to vacate its $105,000 settlement of redlining charges against nonbank mortgage lender and broker Townstone Financial Inc.
The settlement followed a protracted litigation that began in 2020 under the first Trump administration and concluded last November under the Biden administration. The CFPB claimed Townstone actively discouraged potential mortgage applicants because of their race or the racial composition of where they lived or sought to live between 2014 and 2017.
In a statement, the CFPB did an abrupt reversal by stating it “set out to destroy” the company “solely on perceived racial disparities in mortgage application and origination statistics. That disparity? An agency-defined “shortfall” of just 31 applications from ‘majority-minority’ areas, out of 876 total applications in a three-year period.”
The agency also noted the company was allegedly targeted for hosting a radio show that discussed “local crime, political issues around freedom of speech, supporting local law enforcement, and telling people to check out a neighborhood before buying a home.” The CFPB added there was no evidence that potential Townstone customers found the radio show’s contents offensive or discriminatory.
The CFPB filed its request in US District Court for the Northern District of Illinois. The agency is also seeking to compensate Townstone by “returning the six-figure penalty they were forced to pay.”
“CFPB abused its power, used radical ‘equity’ arguments to tag Townstone as racist with zero evidence, and spent years persecuting and extorting them – all to further the goal of mandating DEI in lending via their regulation by enforcement tactics,” said Acting CFPB Director Russ Vought. “The more we uncover at CFPB, the more we see how this agency was weaponized against targeted Americans.”
