The residential lending arm of a Dallas bank agreed to pay $2 million to settle federal allegations that it discriminated against blacks, charging them higher interest rates than whites.
PrimeLending is owned by PlainsCapital Bank and operates in 32 states.
Federal Reserve Bank examiners discovered that the company's loan officers were charging African-Americans higher rates on Federal Housing Administration and Department of Veterans Affairs guaranteed loans. The Fed referred the case to the Justice Department.
"PrimeLending gave its employees wide discretion to increase their commissions by adding "overages" to loans," the Department of Justice said in a statement. "This policy had a disparate impact on African-American borrowers."
The Dallas lender said the agreement with DOJ is not is an admission of liability and it denies any wrongdoing. "We approached the government in an open and cooperative effort to seek a mutually agreeable resolution of this matter, and this agreement concludes that process," PrimeLending said.
PrimeLending is the 14th largest retail mortgage lender in the U.S., according to figures compiled by National Mortgage News and the Quarterly Data Report. It originated $1.8 billion of single-family loans in the second quarter.
