Supreme Court rejects Emigrant's reverse redlining appeal

The U.S. Supreme Court rejected the appeal of Emigrant Mortgage and Emigrant Bank in a reverse redlining case over predatory lending cases on loans originated between 1999 and 2008.

The online docket for the case has a Jan. 12 entry stating "Petition DENIED" with no other links or explanations.

The loans involved were made to minority borrowers using STAR NINA program. NINA was an industry acronym standing for no income, no asset verification mortgages, a product many ascribe as a significant cause of the Great Financial Crisis.

Relman Colfax, the attorneys for the plaintiffs in this matter, alleged on its website for the case and in a press release that Emigrant aggressively marketed these mortgages to Black and Latino applicants with poor credit histories, hence the reverse redlining. The loans had a default interest rate of 18%. As a result, four of the borrowers went into foreclosure or were forced to sell their homes, the attorneys said.

"Through the efforts of these individual plaintiffs, Emigrant has finally been held accountable for some of the most toxic lending practices of the 2000s, practices that ravaged New York City's communities of color," Rachel Geballe of Legal Services NYC's Brooklyn office, said in a press release. "We hope this case sends a message loud and clear to lenders that, no matter how long it takes, they will be held accountable for discriminatory practices and predatory lending."

What was decided at trial and in the appeal

A June 2016 trial awarded four of the eight plaintiffs $722,044 in compensatory damages and the others nominal damages of $1 each. This was the second in the case after Judge Sterling Johnson ordered a new hearing limited to the issue of damages; the original jury awarded the plaintiffs $950,000.

The award was upheld in a February 2025 Second Circuit ruling; but that panel split 2-1. In his dissent, Judge Michael Park stated the majority blessed significant legal errors, including that the claims were time barred by the statute of limitations for the Fair Housing Act and Equal Credit Opportunity Act, given the cases were filed in 2011 and 2014 and the date of the last act was 2008.

"Second, even if the claims were timely, the district court's charge allowed the jury to find disparate-impact discrimination based only on a 'substantial adverse impact,' with no showing of disproportionate effects on minority borrowers," Park wrote.

The Trump Administration has removed the use of disparate impact as a regulatory tool on the federal level.

But the majority said the claims were timely using the doctrine of equitable tolling, invoked in cases where the plaintiffs could not file in time because of the defendant's actions.

How the borrowers view the Supreme Court ruling

"Through the persistence of our plaintiffs and their bravery to stand up against a major New York lender for what is right, justice is finally being served," said Tara Ramchandani, co-managing partner at Relman Colfax, in a press release.

"While we are saddened that some of the victims fighting for fairness are no longer with us after this nearly fifteen-year-long David versus Goliath battle, we honor their legacy, knowing they had a critical part to play in ensuring injustice was exposed and history has been made."

Felipe Howell was one of the foreclosed homeowners. He passed away as the case was being litigated.

"My dad never gave up fighting for justice," said Felipe Howell Jr. "He was dedicated to this fight for all of the plaintiffs, and for every homeowner who got one of these terrible loans and never had the chance to see Emigrant in court."

National Mortgage News reached out to Emigrant for a comment.