The U.S. Justice Department has filed a settlement agreement and order that resolved allegations that Chevy Chase Bank FSB engaged in a pattern or practice of discrimination against qualified African-American and Hispanic borrowers in its home mortgage lending from 2006 through 2009. The settlement, which is subject to court approval, was filed in conjunction with the Justice Department’s complaint in the U.S. District Court for the Eastern District of Virginia. The complaint alleges that Chevy Chase Bank charged elevated prices on mortgage loans made to African-American and Hispanic borrowers in violation of the Fair Housing Act (FHA) and the Equal Credit Opportunity Act (ECOA). Chevy Chase Bank was purchased in 2009 by Capital One, N.A. and Capital One is its successor in interest. The United States’ claims relate solely to loans originated by Chevy Chase Bank and do not relate to any mortgage lending practices of Capital One.
“This settlement ensures that African-American and Hispanic borrowers who paid more for their mortgages as a result of Chevy Chase Bank’s actions will be properly compensated,” said Jocelyn Samuels, Acting Assistant Attorney General for the Justice Department’s Civil Rights Division. “We commend Capital One for working cooperatively with the Justice Department to reach this agreement."
The lawsuit originated from a 2010 referral by the Office of the Comptroller of the Currency (OCC) to the Justice Department’s Civil Rights Division.
“Every loan applicant should be evaluated on objective factors, and not on the basis of the color of their skin, so we are pleased that these illegal loan pricing practices are being remedied,” said Comptroller of the Currency Thomas J. Curry. “The OCC is committed to continuing to work with the Department of Justice and our other federal partners on an interagency basis to ensure fair treatment for everyone in the credit markets.”
Under the proposed settlement, Capital One will pay $2.85 million to approximately 3,100 African-American and Hispanic victims of discrimination. The settlement requires borrowers who are eligible for compensation to be notified and provides for monitoring of the compensation process by the department.
“Our office stands committed to ensuring justice and compensation to those who are victims of unfair lending practices,” said Dana J. Boente, Acting U.S. Attorney for the Eastern District of Virginia. “Through our partnership with the Justice Department’s Civil Rights Division and our membership on the Financial Fraud Enforcement Task Force, we remain steadfastly committed to engaging in this important work.”