DOJ Attorneys Settle Lending Discrimination Lawsuit

Attorneys with the U.S. Department of Justice Civil Rights Division (DOJ) announced in a March 4, 2010 news release posted at http://www.justice.gov that two subsidiaries of American International Group, Inc. have agreed to pay a minimum of $6.1 million to resolve allegations that they engaged in a pattern or practice of discrimination against African American borrowers.  Brought under the federal Fair Housing and Equal Credit Opportunity Acts, the complaint alleged that African American borrowers nationwide were charged higher fees on wholesale loans made by AIG Federal Savings Bank (FSB) and Wilmington Finance Inc. (WFI), an affiliated mortgage lending company.  According to the DOJ news release, AIG FSB and WFI contracted with mortgage brokers to obtain mortgage applications that were underwritten and funded by the defendants.  In this regard, the DOJ complaint alleged that AIG FSB and WFI failed to supervise or monitor brokers in setting broker fees and this practice had a disparate impact on African American borrowers, who were charged higher broker fees than white, non-Hispanic borrowers on thousands of such loans from July 2003 until May 2006, a period of time before the federal government obtained an ownership interest in American International Group, Inc.  As stated in the news release, AIG FSB and WFI are not currently in the business of wholesale home mortgage lending.

A copy of the complaint, as well as additional information about fair-lending enforcement by the DOJ, can be obtained at http://www.justice.gov/fairhousing .