Huntington Mortgage Company Complaint

http://www.usdoj.gov/crt/housing/documents/huntingtoncomp.htm

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF OHIO

UNITED STATES OF AMERICA, Plaintiff,
v.
THE HUNTINGTON MORTGAGE COMPANY, Defendant.
___________________________________

COMPLAINT
The United States of America alleges:
1. This action is brought by the United States to enforce the provisions of Title VIII of the Civil Rights Act of 1968 (the Fair Housing Act), as amended by the Fair Housing Amendments Act of 1988, 42 U.S.C. §§ 3601-3619, and the Equal Credit Opportunity Act, 15 U.S.C. §§ 1691-1691f.
2. This Court has jurisdiction of this action pursuant to 28 U.S.C. § 1345, 42 U.S.C. § 3614, and 15 U.S.C. § 169le(h).
3. Defendant The Huntington Mortgage Company (hereinafter "Huntington") is a mortgage company conducting business in the Northern District of Ohio and elsewhere. Huntington's principal place of business is located in Columbus, Ohio.
4. Huntington's business includes engaging in residential real estate-related transactions and regularly extending credit to persons including origination, processing, underwriting, servicing, and sales on the secondary market of residential mortgage loans.
5. Huntington is subject to federal laws governing fair lending, including the Fair Housing Act, the Equal Credit opportunity Act, and the Community Reinvestment Act of 1977, 12 U.S.C. §§ 2901-2906.
6. Prior to 1994, Huntington set, on a daily basis, minimum prices for home mortgage loans including interest rates and loan origination fees or points. Using these minimum prices, mortgage loan officers employed by Huntington (hereinafter "originators") determined the interest rate and points they would seek to charge applicants for home mortgage credit.
7. Prior to 1994, Huntington gave mortgage loan originators complete discretion to increase prices, i.e., points and interest rates, charged to borrowers over the minimum base prices set by Huntington. Amounts obtained by the originators in excess of the base prices (hereinafter "overages") were shared equally between the originator and Huntington.
8. In June of 1993, the office of the Comptroller of the Currency (OCC) conducted a fair lending examination of Huntington. During this examination, OCC examiners reviewed the overages charged on home mortgage loans originated by Huntington during the first six months of 1993. This analysis revealed significant disparities between the amount of overages charged minority and non-minority borrowers in Huntington's Cleveland office.
9. The OCC conducted an additional analysis of all mortgage loans originated by Huntington during a two-year period ending September 30, 1993, including a detailed file review. This analysis revealed that the Cleveland office of Huntington charged whites overages averaging 0.07 percentage points compared to an average overage of 0.83 percentage points for minority borrowers. Thus, minority borrowers paid overages at a rate ten times greater than white borrowers in the Cleveland market during the two-year period examined by the OCC (0.07% v. 0.83%).
10. OCC's June 1993 fair lending examination found Huntington's supervision of fair lending compliance to be ineffective; its loan origination policies, internal controls, and training to be inadequate; and the resources allocated by Huntington to ensure consumer compliance insufficient. The OCC concluded that Huntington's compliance with fair lending law and regulation was unsatisfactory. Huntington has corrected the deficiencies identified by the OCC, as confirmed by a

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fair lending examination conducted in August of 1994.
11. Pursuant to 15 U.S.C. § 1691e(g), the OCC referred the matter to the Attorney General on August 5, 1994 for appropriate enforcement action, following the OCC's determination that Huntington may have engaged in a pattern or practice of discrimination in violation of the Fair Housing Act and the Equal Credit opportunity Act.
12. Upon receipt of the OCC referral, the Attorney General initiated a follow-up investigation and analysis that included a review of the applications and loan files of all African Americans who applied for home mortgage credit with the Cleveland office of Huntington from October 1991 to September 1993. This analysis revealed that the average overage during this period for all African-American borrowers was 0.86 percentage points compared to an average overage of 0.07 percentage points for whites as determined by the OCC.
13. Prior to 1994, Huntington promulgated no standards and provided no guidance to mortgage loan originators concerning the appropriate factors to considerin determining whether, and in what amount, to seek overages; and did not review, monitor, examine, or analyze the overages charged African-American applicants compared to white applicants to ensure that originators were not charging higher overages to African Americans without adequate race-neutral justification.
14. The disparities in overage amounts charged African-American mortgage loan applicants and white mortgage loan applicants as discussed in Paragraphs 9 and 12 did not occur by chance and cannot be explained by differences in the relative qualifications of white applicants and African-American applicants for mortgage loans, or by other nonracial factors.
15. Huntington's policies and practices as alleged herein constitute:
a. Discrimination on the basis of race in making available residential real estate-related transactions in violation of Section 805 of the Fair Housing Act, 42 U.S.C. § 3605(a);
2. Discrimination on the basis of race in the terms, conditions, or privileges of the provision of services or facilities in connection with the sale or rental of dwellings, in violation of Section 804(b) of the Fair Housing Act, 42 U.S.C. § 3604(b); and
3. Discrimination on the basis of race against applicants with respect to credit transactions, in violation of the Equal Credit Opportunity Act, 15 U.S.C. § 1691(a)(1).
16. Huntington's policies and practices as alleged herein constitute:
a. A pattern or practice of resistance to the full enjoyment of rights secured by the Fair Housing Act, as amended, 42 U.S.C. §§ 3601-3619, and the Equal Credit opportunity Act, 15 U.S.C. §§ 1691-1691f; and
2. A denial of right's granted by the Fair Housing Act, as amended, to a group of persons that raises an issue of general public importance.
17. Persons who have been victims of Huntington's discriminatory policies and practices as alleged herein are aggrieved persons or applicants as referenced or defined under the Fair Housing Act and the Equal Credit Opportunity Act and have suffered damages as a result of Huntington's conduct.
WHEREFORE, the United States prays that the court enter an ORDER that:
1. Declares that the policies and practices of Huntington constitute a violation of Title VIII of the Civil Rights Act of 1968, as amended by the Fair Housing Amendments Act of 1988, 42 U.S.C. §§ 3601-3619, and the Equal Credit Opportunity Act, 15 U.S.C. §§ 1691-1691f;
2. Enjoins Huntington, its employees, agents, and all other persons in active concert or participation with them, from discriminating on account of race in any aspect of their mortgage lending activities;
3. Requires Huntington to develop and submit to the Court for its approval a detailed plan that: (a) remedies the vestiges of Huntington's discriminatory policies and practices; and (b) ensures that future African-American applicants are treated in a nondiscriminatory manner that does not differ from the treatment afforded to white applicants; and
4. Awards such damages as would fully compensate the victims of Huntington's discriminatory policies and practices for the injuries caused by Huntington.

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The United States further prays for such additional relief as the interests of justice may require.
JANET RENO Attorney General
DEVAL L. PATRICK Assistant Attorney General
PAUL F. HANCOCK Chief, Housing and Civil Enforcement Section
ISABELLE M. THABAULT WILLIAM B. SENHAUSER Attorneys, Housing and Civil Enforcement Section U.S. Department of Justice P.O. Box 65998 Washington, D.C. 20035-5998 (202) 514-0809
EMILY M. SWEENEY United States Attorney
Annette G. Butler Reg. #0040038 Assistant U.S. Attorney 600 Superior Ave., East 1800 Bank One Center Cleveland, Ohio 44114 (216) 622-3718

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 Huntington Mortgage Company Settlement Agreement

http://www.usdoj.gov/crt/housing/documents/huntingtonsettle.htm

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF OHIO

UNITED STATES OF AMERICA, Plaintiff,
v.
THE HUNTINGTON MORTGAGE COMPANY, Defendant.
_________________________________________

SETTLEMENT AGREEMENT
1. The parties, acting by and through their counsel, enter into and file this Settlement Agreement simultaneously with the filing by the United States of its Complaint against The Huntington Mortgage Company ("Huntington") alleging violations of the Fair Housing Act, 42 U.S.C. §§ 3601-3619, and the Equal Credit Opportunity Act, 15 U.S.C. §§ 1691-1691f. The Complaint alleges that Huntington engaged in practices that resulted in discrimination on the basis of race in its pricing of certain residential first mortgage loans in the Cleveland, Ohio metropolitan area.
2. More specifically, the United States alleges that, during the period October 1991 through September 1993, Huntington charged 117 African-American customers of its Cleveland office prices for residential first Mortgage loans that were higher than the average price charged white borrowers in the Cleveland market without regard to risk or other race-neutral factors. These higher prices were in the form of higher "overages" paid by African-American borrowers. (1)
3. The parties agree that certain African-American customers for residential first, mortgage loans were charged prices in excess of the average price charged white borrowers in the Cleveland market during the relevant time period. The United States' evidence consists of a mathematical comparison of overages charged whites and African Americans in the Cleveland market. Huntington contests that any violation of law has occurred.
4. The parties have agreed that, in order to avoid protracted and costly litigation, this controversy should be resolved voluntarily. The parties have also agreed that there should be no evidentiary hearing, trial, or other adjudication on the merits, and that entry of this Settlement Agreement is not to be construed as an admission by Huntington of the validity of any of the claims asserted in this action.
I. General Undertaking by Huntington
5. Huntington agrees that it will not engage in any act or practice that discriminates on the basis of race in the pricing of residential first-mortgage loans; and that it will not impose on the basis of race different terms or conditions for the availability of residential first mortgage loans, all as prohibited by the provisions of 42 U.S.C. §§ 3604 & 3605 (Fair Housing Act); 15 U.S.C. § 1691 (a)(1) (Equal Credit Opportunity Act); 12 C.F.R. § 202 (Regulation B). The parties agree that this undertaking by Huntington, and every other undertaking by Huntington contained in this Settlement Agreement, shall be enforceable by order of this Court upon application therefor by the United States.

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II. Specific Undertakings by Huntington
6. The United States recognizes that Huntington has developed and implemented new procedures and standards for pricing residential first mortgage loans system-wide, including comprehensive monitoring. The parties agree that, while these changes have been voluntarily implemented by Huntington, the specific items described in paragraphs 7 and 8 below shall constitute specific undertakings by Huntington.
7. In order to ensure uniform pricing without regard to race or other prohibited bases, Huntington has capped overages on all loan products at 1 percent of the loan amount, absent unusual circumstances and only then with the specific approval of the Huntington compliance officer (see below)
8. Huntington and its parent bank, The Huntington National Bank, have also implemented a monitoring and compliance system to ensure uniform application of pricing criteria by Huntington's loan originators. This system includes: A. Restructuring of the management of Huntington to ensure full and complete monitoring of the loan origination process and a complete revision of the Huntington Retail Origination Procedures Manual;
2. Appointment of senior-level managers at Huntington and Huntington Bancshares Incorporated, the parent holding company of The Huntington National Bank, to serve as compliance officers along with subsidiary positions;
3. Implementation of a comprehensive system to permit the detailed and ongoing monitoring of mortgage origination and pricing practices;
4. Development and implementation of a new program for monitoring overages to ensure that flexible pricing does not result in disparate treatment, including regular analyses of overages by race and other prohibited bases; and
5. Development and implementation of a new, mandatory training program for all personnel with customer contact.
9. In light of Huntington's good-faith self-assessment and voluntary implementation of meaningful remedial measures, the United States believes that extensive affirmative procedural practices are unnecessary to insure compliance with the provisions of this Settlement Agreement.
III. Recordkeeping and Reporting Requirements
10. For a period of three years from the date of filing of this Settlement Agreement, Huntington agrees to retain all loan application files submitted for residential first mortgage loans and all documents and notices relevant to any pricing decisions in the Cleveland market. Upon reasonable notice, Huntington shall make available for inspection and copying by the United States during the three-year term of this Settlement Agreement individual residential first mortgage loan application files and related records, including any analyses of overages conducted by Huntington.
11. Huntington will report its compliance witIn. this Settlement Agreement to the Civil Rights Division of the United States Department of Justice annually during the three-year term of this Settlement Agreement. (2) This reporting shall consist of:
A. A general report on Huntington's performance in the Cleveland metropolitan area in its processing and pricing of applications for residential first mortgage credit submitted by African Americans that addresses, at a minimum, Huntington's residential first mortgage pricing and production,

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employee recruitment, compliance activities, training, monitoring, and other relevant information; and
2. A statistical analysis similar to those internally prepared by Huntington and previously provided to the Justice Department of overage amounts broken down by race for the relevant period in the Cleveland metropolitan area. Huntington shall prepare additional statistical analysis of the performance of Huntington in the Cleveland metropolitan area at the request of the United States if the United States deems them necessary to measure compliance with the terms of this Settlement Acreement. If the parties are unable to reach agreement on the nature of-any follow-up analyses to be conducted, the matter may be submitted to the Court for resolution. All reports will be submitted to the United States within 90 days after the last business day of each calendar year.
IV. Compensatory Payments
12. Based on a file review and follow-up analysis conducted by the Department of justice with the full Cooperation and assistance of Huntington, the United States has identified 117 applications submitted by African Americans that were charged prices for residential first mortgage loans greater than the average price charged white borrowers in the Cleveland market between October 1991 through September 1993 (the "aggrieved persons"). Each such African-American borrower who paid a price higher than the average price charged white borrowers will be deemed to have been aggrieved and will be entitled to compensation pursuant to the terms of this Settlement Agreement; provided, however, that any African-American borrower who paid a higher price as part of a scheme to defraud Huntington or as part of a scheme to induce Huntington to extend credit based on the submission of blatantly false documents in violation of federal law shall be excluded from the aggrieved persons entitled to receive funds under this Settlement Agreement.
13. Within 30 days after the date of filing of this Settlement Agreement, Huntington shall set aside four hundred twenty thousand dollars ($420,000.00) to compensate aggrieved persons as defined above (Compensation Fund). This fund is to be administered and distributed by Huntington to aggrieved persons whom the United States determines to be eligible for compensation, subject to the terms of this Settlement Agreement.
14. The Compensation Fund will not be distributed in a pro rata manner, but rather, the amount of compensation paid to each aggrieved person will be in proportion to the amount paid by them in excess of the average price charged white borrowers during the relevant time period. Each aggrieved person shall execute a release in the form attached as Exhibit I in exchange for receipt of funds.
V. Retention of Jurisdiction
15. This Settlement Agreement may be modified by written agreement of the parties.
16. This Court will retain jurisdiction of this action for three years from the filing of this Settlement Agreement for purposes of enforcing this Settlement Agreement. The parties will endeavor in good faith to resolve informally any differences regarding interpretation and compliance with this Settlement Agreement prior to bringing such matters to the Court for resolution.
17. The United States shall have the right to stay termination of this Settlement Agreement for good cause shown. In order to stay termination, the United States must file and serve a written objection to termination, which shall be grounded upon a violation or breach by defendants of some provision of this Settlement Agreement, no later than 30 days prior to the expiration of the Settlement Agreement. If an objection is filed, the Court shall hold a hearing on the motion to stay termination.
18. Each party to this litigation will bear its own costs and attorneys' fees.

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Huntington Mortgage Company Settlement Agreement

http://www.usdoj.gov/crt/housing/documents/huntingtonsettle.htm

APPROVED this _______ day of __________, 1995.
UNITED STATES DISTRICT JUDGE
It is so agreed by the parties.
For the United States:
JANET RENO ATTORNEY GENERAL
DEVAL L. PATRICK ASSISTANT ATTORNEY GENERAL
PAUL F. HANCOCK Chief, Housing and Civil Enforcement Section
WILLIAM B. SENHAUSER Attorney, Housing and civil Enforcement Section Civil Rights Division U.S. Department of Justice
EMILY M. SWEENEY UNITED STATES ATTORNEY
ANNETTE G. BUTLER Reg. 00040033 Assistant U.S. Attorney 600 Superior Ave., East 1800 Bank One Center Cleveland, Ohio 44114
For the Defendants:
S. RONALD COOK, JR. Reg. #0023028 Porter, Wright, Morris & Arthur 41 South High Street Columbus, Ohio 43215

1. An "overage" is an amount of money charged to the borrower for a particular mortgage loan product in excess of a minimum base price set daily by Huntington. Prior to 1994, overages obtained by Huntington were split between Huntington and the originator who obtained the overage. Overages can occur both as a result of individual price quotations by originators and as a result of the timing with which the processing steps in origination occur.
2. Copies of all notices, correspondence, reports, or documents required to be provided to the United States will be mailed to the following address:

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Chief, Housing and Civil Enforcement Section Civil Rights Division U.S. Department of Justice P.O. Box 65998 Washington, DC 20035

http://www.usdoj.gov/crt/housing/documents/huntingtonsettle.htm

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 Northern District of Ohio - Docket Report

https://ecf.ohnd.uscourts.gov/cgi-bin/DktRpt.pl?700015152108007-L_3...

Cat03, Streepy, Termed
U.S. District Court Northern District of Ohio (Cleveland) CIVIL DOCKET FOR CASE #: 1:95-cv-02211-DCN

USA v. Huntington Mortgage Assigned to: Hon. Donald C. Nugent Demand: $0 Cause: 42:405 Fair Housing Act Plaintiff United States of America
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Date Filed: 10/18/1995 Date Terminated: 10/18/1995 Jury Demand: None Nature of Suit: 443 Civil Rights: Accommodations Jurisdiction: U.S. Government Plaintiff
represented by Annette G. Butler 1057 East Boulevard Cleveland, OH 44108 216-851-3259 Email: annettebc@aol.com LEAD ATTORNEY ATTORNEY TO BE NOTICED
Deval L. Patrick Department Of Justice Civil Rights Division Housing & Civil Enforcement Section P.O. Box 65998 Washington, DC 20035-5998 LEAD ATTORNEY ATTORNEY TO BE NOTICED
Isabelle M. Thabault Department Of Justice Civil Rights Division Housing & Civil Enforcement Section P.O. Box 65998 Washington, DC 20035-5998 202-514-8040 LEAD ATTORNEY ATTORNEY TO BE NOTICED
Paul F. Hancock Department Of Justice Civil Rights Division Housing & Civil Enforcement Section P.O. Box 65998 Washington, DC 20035-5998 202-514-8040 LEAD ATTORNEY
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Northern District of Ohio - Docket Report

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V. Defendant Huntington Mortgage Company

ATTORNEY TO BE NOTICED
William B. Senhauser Equal Justice Foundation 520 Madison Avenue Ste. 1026 Toledo, OH 43604-1306 419-246-1000 Email: equaljustice@msn.com LEAD ATTORNEY ATTORNEY TO BE NOTICED
represented by Ronald S. Cook, Jr. Porter, Wright, Morris & Arthur 2900 Huntington Center 41 South High Street Columbus, OH 43215 614-227-2000 Fax: 227-2100 LEAD ATTORNEY ATTORNEY TO BE NOTICED

Date Filed 10/18/1995 10/18/1995
10/18/1995 10/18/1995 10/18/1995

#

Docket Text

FILING FEE WAIVED (B,BA A) (Entered: 10/18/1995)
ASSIGNMENT OF MAGISTRATE JUDGE pursuant to Local Rule 1:2.4, Assignment of Cases. In the event of referral this case will be referred to Mag. Judge Jack B. Streepy . 1 pg (V,K) (Entered: 10/18/1995)
1 COMPLAINT ( Service: summons issd, magistrate consent form issd) ( 7 pgs) (V,K) Modified on 10/19/1995 (Entered: 10/18/1995)
2 CIS filed by pltf USA. (1 pg) (V,K) (Entered: 10/18/1995)
3 CONSENT JUDGMENT dismissing case in favor of USA against deft for amt of $420,000.00 to compensate aggreived personas as defined and distr by deft pur to Settlement Agreement; Each part to bear its own costs and attys fees (issued on 10/18/95) ( pgs) Judge Donald C. Nugent (K,V) (Entered: 10/20/1995)

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 Fair Lending Enforcement Program

http://www.usdoj.gov/crt/housing/bll_01.htm

Pricing Discrimination
We have brought several suits challenging discrimination in the price of credit. In the mortgage lending area, pricing disparities often arise as a result of discriminatory application of "overages," that is, the discretionary authority of employees or brokers to charge rates higher than the lender's set rates, for which the employees receive additional compensation. It should be emphasized that the higher prices resulting from overages are not related, in any way, to the qualifications of the borrower or the risk to the lender. The use of an employee or broker incentive program such as an overage system is not unlawful per se, but it becomes unlawful if applied in a manner to extract higher prices from minorities or women because of their race, national origin or gender.
The "overage" issue was involved in a lawsuit filed by our Department against the Huntington Mortgage Company in Cleveland in 1995, in a lawsuit filed in 1996 against the Fleet Mortgage Company in Brooklyn, and in a suit filed in 1996 against Long Beach Mortgage Company in California. In the Huntington and Fleet cases, we alleged that mortgage company employee loan officers were charging African-American and/or Hispanic borrowers higher up-front fees for home mortgage loans than they were charging to similarly situated white borrowers, and that these differences in price could not have occurred by chance and could not be explained by differences in the borrowers' loan qualifications. United States v. The Huntington Mortgage Company, Case No. 1:95 CV 2211 (N.D. Ohio 1995); United States v. Fleet Mortgage Corp., Case No. CV 96 2279 (E.D.N.Y. 1996).

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