Real Estate Company, Fairway, to Compensate $9.9 Million in Redlining Case Settlement
Fairway Independent Mortgage Corporation Settles Redlining Allegations for $8 Million
In a significant development, Fairway Independent Mortgage Corporation has agreed to pay $8 million and a $1.9 million civil money penalty to settle redlining allegations levelled by the Department of Justice (DOJ) and the Consumer Financial Protection Bureau (CFPB). This marks the third such case jointly addressed by the two agencies.
The DOJ and CFPB allege that Fairway discouraged residents of Black neighborhoods in Birmingham, Alabama from applying for mortgage loans. They further claim that the company failed to incentivize loan officers to better serve neighboring Black communities.
According to the settlement, Fairway made loans in neighborhoods comprised of 80% or more Black residents at an even lower rate - less than one-eighth the rate of its competitors. Moreover, more than 97% of Fairway's marketing was directed to majority-white areas between 2015 and 2022. All of Fairway's Birmingham-area retail loan offices were in majority-white areas during this period.
Between 2018 and 2022, just 3.7% of Fairway's applications were for properties in majority-Black neighborhoods, compared to 12.2% for the lender's competitors.
In response, Fairway disputes the allegations, stating that the government didn't provide detailed allegations until after a settlement was reached. The company also alleged that the CFPB and DOJ refused to consider its higher number of loans in majority-Black census tracts.
Fairway will provide $7 million for a loan subsidy program to offer loans in majority-Black neighborhoods. The company will also invest an additional $1 million in programs to support the loan subsidy fund. The $1.9 million civil penalty will go to the CFPB victims relief fund.
Citadel Federal became the first credit union to be penalized by the DOJ in its pursuit of financial institutions that have avoided providing credit services to primarily minority communities. Citadel agreed to pay $6.5 million to resolve its own redlining allegations. OceanFirst Bank agreed to pay $15 million to resolve similar allegations.
The settlement is part of the DOJ's ongoing Combating Redlining Initiative. As the fourth-largest loan originator, according to Bankrate, this case highlights the need for fair and equitable lending practices in the industry.
While the leader of Fairway Independent Mortgage Corp. addressing the redlining allegations is not explicitly named in the search results, Haley Parker is mentioned as the Chief Marketing Officer (CMO) involved in leadership discussions at Fairway Home Mortgage. No comment was given by Fairway beyond its press release regarding the allegations.
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