A mortgage company has agreed to pay $8 million, along with nearly $2 million in civil penalties, to settle accusations of lending discrimination in predominantly Black neighborhoods in Alabama.
The U.S. Department of Justice said the company was accused of redlining, an illegal practice where lenders deny credit to residents in specific areas based on race, color, or national origin. The company, Fairway Independent Mortgage Corporation, chose to resolve the allegations without admitting wrongdoing, according to federal officials.
The Justice Department and the Consumer Financial Protection Bureau alleged that Fairway illegally redlined Black neighborhoods in Birmingham, discouraging residents from applying for mortgage loans through biased marketing and sales practices.
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As part of the settlement, Fairway will allocate $7 million to a loan subsidy program offering affordable home purchase, refinance, and home improvement loans in Birmingham’s majority-Black neighborhoods, invest an additional $1 million in related programs, and pay a $1.9 million civil penalty to the Consumer Financial Protection Bureau’s victims’ relief fund.
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Fairway, a non-depository mortgage company headquartered in Madison, Wisconsin, operates in Birmingham under the trade name MortgageBanc. Despite claiming to serve the Birmingham metropolitan area, the company concentrated its retail loan offices in majority-white areas, directing less than 3% of its direct mail advertising to majority-Black areas, and generated mortgage loan applications in Black communities at rates far below its competitors.
Attorney General Merrick B. Garland emphasized that the settlement would help ensure future generations gain access to homeownership, a legacy often denied to Black Americans. “This case is a reminder that redlining is not a relic of the past,” Garland said, pledging continued efforts to combat lending discrimination.
Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division stated the settlement would increase access to credit and homeownership opportunities in Birmingham’s Black neighborhoods. “This settlement makes clear our intent to uproot modern-day redlining in every corner of the country, including the Deep South,” she added.
This marks the Justice Department’s 15th redlining settlement in three years under its Combating Redlining Initiative, which has secured over $1 billion in investments for communities of color in cities like Houston, Memphis, Los Angeles, Philadelphia, and Birmingham.
