The nation’s top financial regulator announced Friday that it has reached a settlement in a long-running lawsuit with a Chicago mortgage lender over alleged racial discrimination.
The proposed agreement requires Townstone Financial to pay a $105,000 fine to the U.S. Consumer Financial Protection Bureau’s Victim Assistance Fund.
In a statement on its website, the Pacific Legal Foundation, which represented Townstone, said the company neither admitted nor denied the allegations and settled due to the government’s superior legal resources. “This case should never have been filed,” said attorney Steve Simpson.
WHY IT MATTERS
The CFPB says the enforcement action follows the agency’s July legal victory in the U.S. Seventh Circuit Court of Appeals, which gave it new freedom to combat racial discrimination not only in lending but also in the marketing of loans. It’s the agency’s second action against racial discrimination in the mortgage industry in less than three weeks.
KEY QUOTE
“The CFPB’s lawsuit against Townstone Financial included a significant appeals court victory that makes clear that people are protected from illegal redlining even before they file their application,” CFPB Director Rohit Chopra said in a statement.
CONTEXT
In 2020, the CFPB accused Townstone Financial of discouraging Black people from applying for mortgages and ignoring the credit needs of African American neighborhoods in the Chicago area. In weekly marketing radio shows and podcasts, the company is said to have denigrated predominantly black neighborhoods as crime-ridden and “jungle.”
