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GFI Sued for Alleged Discriminatory Lending Practices

A lawsuit was filed against ""GFI Mortgage Bankers"":http://gfimortgage.com/ for allegations that it charged African American and Hispanic borrowers higher interest rates and fees on mortgage loans because of their race rather than their creditworthiness, the ""Justice Department"":http://www.justice.gov/ and the ""U.S. Attorney's Office for the Southern District of New York"":http://www.justice.gov/usao/nys/ announced in a statement Tuesday.
[IMAGE] The complaint was filed Tuesday in the Southern District of New York under the federal Fair Housing Act and Equal Credit Opportunity Act and alleges GFI charged African American and Hispanic borrowers higher rates and fees on mortgage loans compared to whites in similar situations.

For example, an African American borrower who took out a home mortgage loan in 2007 paid on average $7,500

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more over the first four years of the loan than a white borrower in a similar situation, and a Hispanic borrower paid $5,600 more, according to the statement.

During the period when the discrimination occurred, GFI had a policy or practice of allowing and encouraging its loan officers in New York and New Jersey to promote loan products, price loans, and charge fees in a manner that was unrelated to credit risk or loan characteristics.

According to the statement, GFI knew that its loan officers priced loans based on factors unrelated to creditworthiness, resulting in thousands of dollars in overcharges for African American and Hispanic borrowers. GFI also failed to monitor its loan officers to ensure that they were pricing loans in a non-discriminatory manner.

During the period when the discrimination occurred, the number of home mortgage loans issued by GFI increased from 974 in 2005 to 2,270 in 2009. Also, the GFI's revenue from its home mortgage loan services increased from $305 million in 2005 to $768 million in 2009.
This case resulted from a referral by HUD to the Justice Department's Civil Rights Division in 2010.

African American and Hispanic borrowers who received GFI loans since 2005, former employees of GFI or any other individuals with information relevant to this case are encouraged to contact the Justice Department.

About Author: Esther Cho

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