Thursday, September 23, 2010

FTC Settles Mortgage Lending Discrimination Case for $1.5M

The Federal Trade Commission reached a $1.5 Million settlement with a mortgage lender and its owner as to charges that the lender illegally charged Latino consumers higher prices for mortgage loans than non-Latino white consumers, which could not be explained by the applicants’ credit characteristics or underwriting risk.

Copies of the FTC’s complaint, and the Stipulated Final Judgment and Order For Permanent Injunction and Other Equitable Relief, are available at:

The FTC filed a complaint in the U.S. District Court for the Central District of California on May 7, 2009, alleging that Golden Empire Mortgage, Inc. and Howard D. Kootstra violated the Equal Credit Opportunity Act. According to the FTC, the defendants allegedly gave loan officers and branch managers wide discretion to charge some borrowers, in addition to the risk-based price, “overages” through higher interest rates and higher up-front charges. The FTC alleged that the defendants then paid loan officers a percentage of the overages as a commission, failed to monitor whether Latino consumers were paying higher overages than non-Latino white borrowers.