The recent fair-lending settlement in the Long Beach Mortgage Co. case contains few details that could help other institutions avoid the Justice Department's clutches.

The deal doesn't specify how an institution should monitor fair-lending compliance by independent brokers, or how it should treat brokers that provide high-fee loans. The lack of detail is surprising because this is the department's first case covering wholesale lending.

The Long Beach settlement stands in sharp contrast to the department's other lending bias deals, which contained detailed compliance instructions. For example, the still-controversial Chevy Chase Savings Bank settlement required the lender to branch into low-income communities and the Fleet Mortgage Co. deal required the lender to establish an extensive monitoring system to detect pricing discrimination.

This lack of detail has angered banking lawyers, who view the settlement as a dangerous weapon that could return shortly to harm the industry.

"This settlement offers no clue what you should do for compliance," said Larry Platt, a partner at Kirkpatrick & Lockhart who represented Long Beach.

That may be, however, because Long Beach refused to accept an explicit monitoring program for its wholesale mortgage operation.

Mr. Platt said the department originally wanted Long Beach to open retail offices to compete against brokers and to inform borrowers working with brokers that they could get a cheaper rate if they cut out the middleman. Justice also wanted Long Beach to reject otherwise qualified applicants if the broker's rate was too high.

Long Beach, however, refused to consent to any of these provisions. Instead, it agreed to spend $3 million to reimburse overcharged minorities and $1 million for education programs. It also said it would follow the fair-lending laws and offer bias awareness training to brokers. Finally, it agreed to insert a clause into its broker contracts stating that it won't accept discriminatory loans.

On the pivotal issue - how to monitor independent brokers - is virtually ignored in the settlement. The deal requires Long Beach to periodically review its wholesale operations for fair-lending compliance. But it doesn't explain how Long Beach should do that.

Justice Department officials insisted they wanted the agreement to be vague on monitoring loan pricing. "We recognize that lenders understand the industry in ways we don't," said Deval Patrick, the assistant attorney general for civil rights. "That is why there is so much flexibility in the decree."

The department wants wholesale lenders to periodically take a "snap shot" of their loan portfolios to ensure they are treating minorities fairly, Mr. Patrick said.

But Mr. Platt predicted the department will try to impose restrictions on brokering activities in its next wholesale pricing case. "DOJ believes brokers add cost, and not value, to the loan," he said.

But Mr. Patrick said banking lawyers are getting themselves into a tizzy over nothing. "This case means lenders shouldn't gouge their customers on the basis of race, or age, or gender."

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