Deutsche Bank's former subsidiary MortgageIT has agreed to pay $12.1 million to settle claims that it discriminated against African-American and Hispanic consumers seeking mortgage loans, the U.S. Department of Housing and Urban Development said Tuesday.
HUD alleged that MortgageIT charged African-American and Hispanic borrowers higher interest rates and fees and denied a disproportionate portion of mortgage applications from minority borrowers in violation of the Fair Housing Act.
African-American borrowers at MortgageIT were 65% more likely to receive higher-priced loans and paid an average $707 more in fees, while Hispanic borrowers were 72% more likely to receive higher-priced loans and paid an average $906 more in fees, according to HUD's review of company loan data from 2007 and 2008.
"It's creditworthiness and ability to pay that matter when you apply for a loan, not your race or where you come from," Bryan Greene, HUD's acting assistant secretary for fair housing and equal opportunity, said in the release. "This settlement reaffirms HUD's commitment to ensuring that minorities have equal access to mortgage loan products and that lending institutions meet their obligations under the Fair Housing Act."
Deutsche Bank bought MortgageIT in 2007 and wound down the company in 2008.
"Though we deny these allegations, we are pleased to put the matter behind us," Deutsche Bank spokeswoman Renee Calabro said.