The Federal Trade Commission has returned $1.5 million to 3,162 consumers harmed by a California-based mortgage lending company and its owner.
Golden Empire Mortgage Inc. and Howard D. Kootstra allegedly illegally charged Hispanic consumers higher prices for mortgage loans than non-Hispanic white consumers.
The price disparities could not be explained by the applicants' credit traits or underwriting risk.
The FTC first filed a complaint in federal court on May 7, 2009, alleging that Golden Empire and Kootstra violated the Equal Credit Opportunity Act in pricing mortgage loans.
They 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 upfront charges.
They then paid loan officers a percentage of the overages as a commission, according to the complaint, and failed to monitor whether Hispanic consumers were paying higher overages than non-Hispanic white borrowers.
The settlement order imposed a $5.5 million judgment that was suspended when the defendants paid the $1.5 million.
The settlement bars the defendants from discriminating on the basis of national origin in credit transactions and requires Golden Empire to establish and maintain a policy that restricts loan originators’ pricing discretion, a fair lending monitoring program, a program to ensure the accuracy and completeness of their data and employee training programs.
