Justice Department proposes consent order in Evolve mortgage pricing case
The Justice Department announced a proposed consent order with Evolve Bank and Trust to resolve allegations that the bank discriminated in residential mortgage pricing on the basis of race, sex and national origin.
The Justice Department said on Sept. 29, 2022, that it had reached a proposed consent order with Evolve Bank and Trust to settle allegations that the bank discriminated in the pricing of residential mortgage loans.
The proposed order would require the Memphis, Tennessee-based bank to compensate affected borrowers and change how it sets mortgage prices. The Justice Department said the case involved claims under the Fair Housing Act and the Equal Credit Opportunity Act.
According to the Justice Department, the alleged discrimination affected residential mortgage loan pricing from at least 2014 through 2019. The department said Black, Hispanic and female borrowers paid more than White or male borrowers in discretionary pricing components for reasons unrelated to creditworthiness.
The source says those discretionary pricing components let loan officers set artificially high interest rates and offer discounts without having to document a justification. Evolve Bank maintains mortgage lending offices and services in 15 states, according to the source.
The proposed consent order would require Evolve Bank to create a $1.3 million fund to compensate affected borrowers and pay a $50,000 civil penalty. For four years, the bank would also have to maintain policies designed to reduce loan officer discretion, employ a fair lending officer in close consultation with bank leadership, and provide fair lending training to personnel.
The source says the Justice Department opened an investigation and filed a complaint before announcing the proposed settlement. It also says the department relied on disparate impact theory, rather than direct discrimination evidence, in the matter.
The source described the Evolve case as part of a broader set of Justice Department and Consumer Financial Protection Bureau consent orders in 2022 involving alleged discrimination.
What happens next was not detailed in the source beyond the proposed consent order and its compliance terms.
Sources
Editorial note: This article was prepared with AI assistance and includes source attribution for reader review.
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