IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF WISCONSIN

UNITED STATES OF AMERICA, Plaintiff,
v. SOUTHPORT BANK,
Defendant.

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COMPLAINT

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Case No. 13-C-1086

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Plaintiff, United States of America, alleges:

INTRODUCTION

1. The United States brings this action against Southport Bank of Kenosha,

Wisconsin (“Southport” or “the bank”) for discriminating against African-American and

Hispanic borrowers in its residential mortgage lending. The action to enforce the Fair Housing

Act, 42 U.S.C. §§ 3601-3619 (“FHA”) and the Equal Credit Opportunity Act, 15 U.S.C. §§

1691-1691f (“ECOA”) is brought to remedy the discrimination based on race and national origin

that Southport engaged in from 2007 to 2008 in its wholesale mortgage lending program.

2. In 2007 and 2008, Southport charged hundreds of African-American and Hispanic

wholesale borrowers higher fees than non-Hispanic white (“white”) borrowers, not as a result of

their creditworthiness or other objective criteria related to borrower risk, but because of their

race and national origin.

3. It was Southport’s business practice to allow its mortgage brokers to vary their

fees and thus alter the price set based on a borrower’s objective credit-related factors. This

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subjective and unsupervised pricing discretion resulted in African-American and Hispanic borrowers paying more than white borrowers for home mortgage loans.
4. As a result of the bank’s discriminatory practices, an African-American or Hispanic borrower paid, on average, thousands of dollars more for a Southport loan.
5. This Court has jurisdiction of this action pursuant to 28 U.S.C. § 1345, 42 U.S.C. § 3614, and 15 U.S.C. § 1691e(h). Venue is appropriate pursuant to 28 U.S.C. § 1391.
PARTIES 6. Southport is headquartered in the City of Kenosha, Wisconsin. In 2007 and 2008, 96% of the bank’s home mortgage loans were made to borrowers in two Metropolitan Statistical Areas, Chicago-Naperville-Joliet and Milwaukee-Waukesha. Southport has two branches in Kenosha and a third in the Kenosha suburb of Salem. The bank is subject to the supervision of the Federal Deposit Insurance Corporation (“FDIC”). 7. Southport is subject to the federal laws governing fair lending, including the FHA and ECOA and their respective implementing regulations, the fair housing regulations of the Department of Housing and Urban Development, 24 C.F.R. § 100.1, et seq., and Regulation B of the Consumer Financial Protection Bureau, 12 C.F.R. § 1002.1, et seq. The FHA and ECOA prohibit financial institutions from discriminating on the basis of, inter alia, race and national origin in their mortgage lending practices. 8. Southport is a “creditor” within the meaning of section 702(e) of ECOA, 15 U.S.C. § 1691a(e), and is engaged in “residential real estate-related transactions” within the meaning of section 805 of the FHA, 42 U.S.C. § 3605. The bank also is subject to the Home Mortgage Disclosure Act (“HMDA”), 12 U.S.C. § 2803, which requires mortgage lenders to maintain data on the race and ethnicity of each borrower.
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FACTUAL ALLEGATIONS 9. The FDIC’s regular statistical analyses of 2007 and 2008 HMDA data for Southport revealed substantial disparities in the amount paid by minority borrowers for wholesale mortgage loans. The agency determined through interviews with bank personnel that the bank permitted considerable discretion in compensation to wholesale brokers who delivered applications to the bank’s mortgage lending division, ComCor Mortgage Company,1 for origination. 10. Based on its analyses, the FDIC found reason to believe that Southport had engaged in a pattern or practice of discrimination by allowing wholesale brokers to charge African-American and Hispanic borrowers higher fees for home loans than white borrowers. On May 21, 2012, the FDIC referred the lending practices of Southport to the United States Department of Justice pursuant to 15 U.S.C. § 1691e(g). After receiving the FDIC’s referral, the Department of Justice conducted its own analyses of HMDA data supplemented with information provided by the bank. 11. Wholesale loans, originated by more than 150 brokers, accounted for approximately 80 percent of Southport’s home mortgage loans2 in 2007 and 2008. During that period, the relationship of the bank with its brokers was governed by a Broker Agreement, which provided that the broker would submit applications for home mortgage loans to ComCor.
1 In September 2008, the bank began to wind down its mortgage lending activities and after November of that year made virtually no new home mortgage loans. On December 31, 2008, Southport closed ComCor. The bank does not currently originate mortgage loans. 2 For purposes of this Complaint, and consistent with HMDA, the term “home mortgage loan” or “home loan” refers to loans originated for the purchase or refinance of conventional, first-lien, owner-occupied, one-to-four family homes.
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12. Southport’s policies and practices established a two-step process for the pricing of wholesale mortgage loans. First, the bank used daily rate sheets that it shared with brokers to negotiate interest rates with potential borrowers. In addition to establishing the range of rates for each loan product, Southport also set the corresponding yield spread premium (YSP) it would pay brokers.3
13. The bank’s second step of pricing wholesale mortgage loans authorized mortgage brokers to impose subjective additional charges on applicants unrelated to their credit risk characteristics. Mortgage brokers who supplied Southport with wholesale loans were compensated in two ways: through YSPs and through direct fees paid by the borrower to the broker.
14. Southport did not provide brokers with pricing guidelines or procedures. Mortgage brokers exercised the fee pricing discretion Southport gave them without being held to any objective credit standards on any loan application they brought to the bank. The bank affirmed or ratified these discretionary fee pricing decisions for all the brokered loans it originated and funded. In addition, Southport did not conduct any type of broker monitoring to determine whether there were disparities between the total fees charged to minority and white borrowers.
15. Under the Broker Agreement, Southport retained sole discretion to approve or reject any application submitted by a broker.
3 A YSP is “a payment by a lender to a broker based on the extent to which the interest rate on the loan exceeds a base or ‘par’ rate. The lender’s payment of a [YSP] to the broker, and the broker’s imposition of a higher interest rate are unrelated to the borrower’s creditworthiness.” Ware v. Indymac Bank, FSB, 534 F. Supp. 2d 835, 839 (N.D. Ill. 2008).
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16. For each loan originated by Southport, information about each borrower’s race and national origin and the amounts and types of broker fees paid was available to and reasonably should have been known by the bank prior to the approval and funding of the loan. Southport was required to collect, maintain, and report data with respect to certain loan terms and borrower information for residential loans, including the race and national origin of each wholesale residential loan borrower, pursuant to HMDA, 12 U.S.C. § 2803.
17. In 2007, Southport’s African-American home mortgage customers were charged total broker fees that, on average, were 43 basis points higher for home purchase loans and 134 basis points higher for refinance loans as a percentage of the loan amount than the total broker fees charged to white customers. In 2008, the average disparities were 119 and 116 basis points, respectively. These disparities are statistically significant and are not based on borrowers’ individual credit risk characteristics.
18. These disparities in total broker fees mean, for example, that in 2007, an AfricanAmerican customer borrowing $166,6544 for a home purchase loan paid an average of $717 more in total broker fees than white customers. In 2008, an African-American customer borrowing $200,308 for a home purchase loan paid an average of $2,384 more than white customers. For refinance loans in 2007, Southport charged its African-American customers borrowing $171,000 for a refinance loan an average of $2,291 more in total broker fees than white customers. In 2008, Southport charged its African-American customers borrowing $195,804 for a refinance loan an average of $2,271 more than white borrowers.
4 The examples cited in Paragraphs 18 and 20 as to the amounts overpaid by minority borrowers use the average home loan amounts that the bank originated to either African-American or Hispanic borrowers for home purchase or refinance loans in 2007 and 2008.
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19. In 2007, Hispanic home mortgage customers were charged total broker fees that, on average, were 61 basis points higher for home purchase loans and 64 basis points higher for refinance loans than the total fees charged to white customers. In 2008, the average disparities rose to 78 and 82 basis points, respectively. These disparities are also statistically significant and are not based on borrowers’ individual credit risk characteristics.
20. These disparities in total broker fees mean, for example, that in 2007, a Hispanic customer borrowing $205,152 for a home purchase loan paid an average of $1,251 more than white customers. In 2008, a Hispanic customer borrowing $211,600 for a home purchase loan paid an average of $1,650 more than white customers. For refinance loans in 2007, Southport charged its Hispanic customers borrowing $244,213 for a refinance loan an average of $1,562 more in total broker fees than white customers. In 2008, Southport charged its Hispanic customers borrowing $188,509 for a refinance loan an average of $1,546 more than white borrowers.
21. In setting the terms and conditions for its loans, Southport accounted for individual borrowers’ differences in credit risk characteristics by utilizing rate sheets for each loan product that included an assessment of applicant creditworthiness. Mortgage brokers’ deviations from the rate sheet prices, as measured by total broker fees, were separate from and not controlled by the credit risk adjustments already reflected in the rate sheet prices. The bank was aware of these total broker fees and charged them to borrowers in the loans it originated and funded. Accordingly, the race and national origin-based broker fee disparities described in Paragraphs 17 and 19 are not adjusted for borrowers’ credit risk characteristics.
22. No Southport policy directed its mortgage brokers to consider a borrower’s credit risk characteristics for a second time in deviating from the interest rate fixed by its rate sheets for
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a specific loan product for a borrower with specified credit qualifications or in assessing direct fees. Nevertheless, statistical regression analyses of total broker fees that control for credit risk factors such as the loan amount, the specific month of origination, and the state where the property was located demonstrate a similar pattern of race and national origin pricing disparities, with the magnitude only slightly diminished from the disparities described above. Thus, accounting for credit risk factors a second time does not explain the race and national origin disparities with respect to the amount of fees paid by minority borrowers as opposed to white borrowers, even if those factors were relevant to the total broker fees not based on borrower risk.
23. The statistically significant race and national origin-based disparities described in Paragraphs 17 and 19 for African-American and Hispanic borrowers whom Southport determined had the credit characteristics to qualify for a home mortgage loan resulted from the implementation and the interaction of the bank’s policies and practices that: (a) included pricing terms based on the unsupervised discretion of brokers in setting total broker fees not based on borrower risk in the terms and conditions of loans Southport originated after interest rates had been established by reference to credit risk characteristics; (b) did not require mortgage brokers to justify or document the reasons for the amount of total broker fees not based on borrower risk; and (c) failed to monitor for or remedy the effects of racial and ethnic disparities in those broker fees. Total broker fees specifically measure the pricing variation caused by the unsupervised pricing adjustments not based on borrower risk. Southport continued to use these discretionary wholesale broker fee pricing policies, to document and review inadequately the implementation of that pricing component, and to incentivize upward broker adjustments to the established interest rates in 2007 and 2008.
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24. The higher total broker fees charged to African-American and Hispanic borrowers as compared to white borrowers were a result of Southport’s policy and practice of ratifying the unsupervised discretion of its brokers in the setting of their fees, and cannot be fully explained by factors unrelated to race or national origin. This policy and practice is not justified by business necessity or legitimate business interests.
FAIR HOUSING ACT AND EQUAL CREDIT OPPORTUNITY ACT VIOLATIONS 25. Southport’s actions, policies, and practices, as alleged herein, constituted: a. Discrimination on the basis of race or national origin in making available
residential real estate-related transactions in violation of the FHA, 42 U.S.C. § 3605(a); b. Discrimination on the basis of race or national origin in the terms, conditions, or
privileges of sale of a dwelling in violation of the FHA, 42 U.S.C. § 3604(b); and c. Discrimination against applicants with respect to credit transactions on the basis
of race or national origin in violation of ECOA, 15 U.S.C. § 1691(a)(1). 26. Southport’s actions, policies, and practices, as alleged herein, constituted: a. A pattern or practice of resistance to the full enjoyment of rights secured by the
FHA, 42 U.S.C. §§ 3601 et seq., and ECOA, 15 U.S.C. § 1691e(h); and b. A denial of rights granted by the FHA to a group of persons that raises an issue of
general public importance. 27. Persons who have been victims of Southport’s discriminatory actions, policies,
and practices are aggrieved persons as defined in the FHA, 42 U.S.C. § 3602(i), and as described in ECOA, 15 U.S.C. § 1691(e)(i), and have suffered injury and damages as a result of Southport’s violation of both the FHA and ECOA, as described herein.
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28. Southport’s pattern or practice of discrimination was intentional and willful, and was implemented with reckless disregard for the rights of African-American and Hispanic borrowers.
WHEREFORE, the United States prays that the Court enter an ORDER that: (1) Declares that the policies and practices of the Defendant constitute a violation of the FHA, 42 U.S.C. §§ 3601-3619, and ECOA, 15 U.S.C. §§ 1691-1691f; (2) Enjoins Defendant, its agents, employees, and successors, and all other persons in active concert or participation with Defendant, from:
(A) Discriminating on account of race or national origin in any aspect of its lending business practices;
(B) Failing or refusing to take such affirmative steps as may be necessary to restore, as nearly as practicable, the victims of Defendant’s unlawful practices to the position they would be in but for the discriminatory conduct;
(C) Failing or refusing to take such affirmative steps as may be necessary to prevent the recurrence of any discriminatory conduct in the future and to eliminate, to the extent practicable, the effects of Defendant’s unlawful practices, and providing policies and procedures to ensure all segments of Defendant’s market areas are served without regard to prohibited characteristics; (3) Awards monetary damages to all the victims of Defendant’s discriminatory policies and practices for the injuries caused by the Defendant, pursuant to 42 U.S.C. § 3614(d)(1)(B) and 15 U.S.C. § 1691e(h); and (4) Assesses a civil penalty against the Defendant in an amount authorized by 42 U.S.C. § 3614(d)(1)(C), in order to vindicate the public interest.
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The United States further prays for such additional relief as the interests of justice may

require.

Dated: September 26, 2013

ERIC H. HOLDER, JR. Attorney General

/s James L. Santelle JAMES L. SANTELLE United States Attorney Eastern District of Wisconsin

/s Jocelyn Samuels JOCELYN SAMUELS Acting Assistant Attorney General

/s Matthew D. Krueger MATTHEW D. KRUEGER Assistant United States Attorney District of Columbia Bar No. 979682 United States Attorney’s Office Eastern District of Wisconsin 517 East Wisconsin Avenue, Suite 530 Milwaukee, Wisconsin 53202 Tel.: (414) 297-1700 Fax: (414) 297-4394 Email: matthew.krueger@usdoj.gov

/s Steven H. Rosenbaum STEVEN H. ROSENBAUM Chief
/s Nancy F. Langworthy COTY R. MONTAG Deputy Chief NANCY F. LANGWORTHY Trial Attorney United States Department of Justice Civil Rights Division Housing and Civil Enforcement Section 950 Pennsylvania Avenue, NW – G St. Washington, DC 20530 Tel.: (202) 616-8925 Fax: (202) 514-1116 E-mail: nancy.langworthy@usdoj.gov

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 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF WISCONSIN

UNITED STATES OF AMERICA,
Plaintiff, v.
SOUTHPORT BANK,
Defendant.

Case No. 13-CV-1086-JPS
CONSENT ORDER

I. INTRODUCTION This Consent Order (Order) is submitted jointly by the parties for the
approval of and entry by the Co urt simultaneously with the filing of the United States' Complaint in this action. This Order resolves the claims of the United States that Southport Bank ("Southport" or "the bank") has engaged in a pattern or practice of lending discrimination in violation of the Fair Housing Act (FHA), 42 U.S.C. §§ 3601-3619, and the Equal Credit Opportunity Act (ECOA), 15 U.S.C. §§ 1691-1691f, by allowing its wholesale mortgage brokers to c harge African-American and Hispanic borrowers higher broker fees for residential real estate-related loans than non-Hispanic white ("white") borrowers.
There has been no factual finding or adjudication with respect to any matter alleged by the U nited States. Southpor t denies the United States' allegations that it violated the FHA or ECOA and maintains that it conducted its lending in compliance with the fai r lending laws. Ac cordingly, the execution of this Order is not, and is not to be considered as, an admission or finding of any violation of theFHA or ECOA by the bank. Rather, the parties have entered into this agreed Order to resolve voluntarily the claims asserted

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by the United States in order to a void the risks, burdens, and cost of litigation. Th e parties agree that full implementation of the terms of this Order shall provide a resolution of the allegations of the United States in a manner consistent with Southport's legitimate business interests. II. BACKGROUND
Southport is headquartered in the City of Kenosha, Wisconsin. In 2007 and 2008, 96% of SPB'shome mortgage loans were made to borowers in two Metropolitan Statistical Areas (MSA s), Chicago-Naperville-Joliet and Milwaukee-Waukesha. The bank has two branches in Kenosha and a third in the Kenosha suburb of Salem.
Southport is s ubject to the supervision of the Federal Deposit Insurance Corporation ("FDIC"). As part o f the FDIC's July 20, 2009 Compliance Examination, the agency found reason to believe that the bank engaged in pattern or practice violations of the FHA and ECOA by originating mortgage loans where the compensation received by the brokers was significantly higher for African-American or Hispanic borrowers than non-Hispanic white borrowers with regard to the conventional, first-lien, owner-occupied home purchase loans secured by 1-4 family dwellings the Bank originated through its wholesale mortgage lending division, ComCor Mortgage Company ("ComCor"), in 2007 and 2008. On May 21, 2012, t he FDIC referred the lending practices of Sout hport to th e United States Department of Justice pursuant to 15 U.S.C. § 1691e(g).
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Based on i ts own i nvestigation, the United Stat es contends that between 2007 and 2008,1 Southport charged hundreds of African-American and Hispanic wholesale borrowers higher fees on both purchase and refinance home mortgage loans2 than white borrowers not based on their creditworthiness or other objective criter ia related to borrower risk, but because of their race or national origin. The Complaint alleges that it was Southport's business practice to allow its mortgage brokers who generated loan applications for the bank to vary their fees and thus alter the price set based on a borrower's objective credit-related factors. The United States contends that this subjective and unguided pricing discretion resulted in African-American and Hispanic borrowers paying more not based on borrower risk than whi te borrowers for ho me mortgage loans. The Complaint alleges that as a result of the bank's discriminatory practices, an African-American or Hi spanic borrower paid, on a verage, thousands of dollars more for a Southport loan. III. REMEDIAL ORDER
1. Unless otherwise stated herein, the remedial provisions of this Order shall be implemented within ninety (90) days of the Effective Date of
1In September 2008, Southport began to wind down its wholesale mortgage lending activities and after November of that year made virtually no new wholesale home mortgage loans. On December 31, 2008, the bank closed ComCor. The bank does not currently originate wholesale mortgage loans and has no intention to reenter this line of business.
2For purposes of this proposed Consent Order, and consistent with the Home Mortgage Disclosure Act (" HMDA"), the term "home mortgage loan" or "home loan" refers to loans originated for the pu rchase or refin ance of owner-occupied, one-to-four family dwellings.
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this Order and shall continue throughout its term. The Effective Date of this Order shall be the date on which it is approved and entered by the Court.
2. Southport, including all of its officers, employees, agents, representatives, assignees, and all those in active concert or participation with any of them, is hereby enjoined from engaging in any act or practice that discriminates on the basis of race or nat ional origin in any aspect of a residential real estate-related transaction in violation of the FHA, or in any aspect of a credit transaction in violation of ECOA. This prohibition includes, but is not limited to: the adoption, performance, or implementation of any policy, practice, or act that results in race or national origin discrimination against residential mortgagors.
3. Southport represents that i t no lo nger originates wholesale residential mortgage loans. In the eventthat the bank decides to resume the origination of wholesale residential mortgage loans, it shall notify the United States at the earlier of sixty (60) days before it intends to reenter this line of business or the time that it notifies its federal regulator. Southport shall also implement policies, practices, and monitoring designed to prevent and detect potential fair lending violations in its origination of residential loans, and shall provide the United States with the details of these policies, practices, and monitoring forty-five (45) days prior to implementing such reentry. The United States shall have thirty (30) days to review and agree or object to the proposed policies. The parties shall utilize the dispute resolution procedures set forth in Paragraph 18 to resolve any objections by the United States.
4. Southport shall deposit in an interest-bearing escrow account the total sum of $687,000 to compensate for monetary damages that affected persons may have suffered as a result of the alleged violations of the FHA
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and ECOA wi th respect to residential mortgage loans (the "Sett lement Fund"). Title to this account shall be in the name of "Southport Bank for the benefit of affected persons pursuant to Order of the Court in Civil Action No. 13-CV-1086." Southport shall provide written verification of the deposit to the United States within five (5) days of the Effective Date of thisOrder. Any interest that accrues shall become part of the Settlement Fund and be utilized and disposed of as set forth herein.
5. Within thirty (30) days of the Effective Date of this Order, the United States shall request any information it believes shall assist in identifying affected persons anddetermining any damages. Southport shall, within thirty (30) days of recei pt of such request, use its reasonable, best efforts to s upply, to the extent that it is within the bank's control, such information as requested. Requested data maybe supplied as a supplement to the database already pro vided to the Unit ed States by the bank in the course of the United States' inquiry. To the extent that the information is not within Southport's control, the bank shall, within thirty (30) days of receipt of such request, supply any data ni its control that identifies other parties that may have the information.
6. The United States shall, upon reasonable notice, be allowed access to th e bank's records and files to veri fy the accuracy of the data provided and to otherwise identify persons entitled to the payments from the Settlement Fund.
7. Within ninety (90) days of the Effective Date of this Order, the United States shall provide to Southport a list of affected persons and an amount each individual shall receive from the Settlement Fund to compensate for monetary damages these persons may have suffered, subject
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to the conditions set forth in Paragraph 8. The bank shall have sixty (60) days from receipt of such list in which to review the list and the United States shall consider in good faith any issues raised by the bank.
8. Payments from the Settlement Fund to affected persons shall be subject to the following conditions:
(a) No affected person shall be paid any amount from the Settlement Fund until he or she has executed and delivered to Southport a written release, as set forth in Appendix A, of all claims, legal or equitable, that he or she might have against the released persons and entities regarding the claims asserted by the United States in this lawsuit, so long as such claims accrued prior to the entry of this Order; and
(b) The total amount paid by Southport collectively to the affected persons shall not exceed the amount o f the Set tlement Fund, including accrued interest.
9. Southport shall, at the expiration of the latter of sixty (60) days after receiving the compensation list referred to in Paragraph 7 or thirty (30) days after resolving any issues raised with the United States pursuant to Paragraph 7, notify each identified person eligible for compensation by a letter (using its reasonable best efforts to locate each person). The form of this letter shall be subject to the review and approval of the United States. At a minimum, the letter shall state that the identified person is eligible for compensation in the i ndicated amount prov ided he or she executes and returns to the bank a copy of the agreed-upon release, which release shall be enclosed with the notice along with an addressed and postage-paid return envelope. Each lett er shall identify the loan(s) the bank originated to the identified person. Any letters that are returned with a forwarding address
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shall promptly be re-sent to that new address. Southport shall provide an accounting of these notifications, indicating the name and address to which each was dispatched, within the sixty (60) day period referred to in t his paragraph.
10. Southport shall issue checks in the amount i ndicated on the compensation list to all identified persons who execute and retur n the releases. Southport shall issue and mail such checks no laterthan twenty-one (21) days after the receipt of the release. Southport shall set forth reasonable deadlines for requirements of return of releases, and for the timely deposit of checks, subject to approval of the United States, so that the compensation is distributed and checks are presented for payment or become void prior to the date that is one year from the date the initial notifications are sent. For the twelve (12) month period after the initial notifications are sent to affected persons pursuant to Paragraph 9, Southport shall provide the United States with a quarte rly accounting of r eleases received, checks sen t, and notifications for which no response has been received or that were reported to be undeliverable. The United States may make its own efforts to locate affected persons.
11. All money not distributed to allegedly affected persons from the Settlement Fund, including accrued interest, within one year of the date the initial notifications are sent to persons deemed to be affected by the United States shall be distributed to one or more organizations that provide services including credit and housing counseling (including assistance in obtaining loan modification and preventing foreclosure), legal representation of borrowers seeking to obtain a loan modification or to prevent foreclosure, financial literacy, and other related educational programs targeted at
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African-American and Hispanic potential and former borrowers in the communities where Southport's branches are located or in MSAs where Southport presently or formerly operated. Recipient(s) of such funds must not be related to Southport, its parent, or any entity owned by the bank. Before selecting the qualif ied organization(s), Southport shall obtai n a proposal from the organization(s) on how the funds will be used consistent with the above-stated purpose, submit such proposal to the United Stat es, and consult with and obtain the non-objection of the United S tates. Th e United States and Southport may request modification of the proposal before approving the organization(s).
12. The parties shall obtai n the Court 's approval for t he organizations to receive funds and the amount to be distributed to each prior to distribution provided by Paragraph 11. The parties s hall provide the Court with information regarding how the proposed organizations meet the requirements set for th in Paragraph 11. S outhport shall requi re each recipient to submit to the Court, the bank, and the United States a report detailing that funds are utilized for the purposes identified in Paragraph 11 within one year after the funds are distributed, and every year thereafter until the funds are exhausted. For any recipient that does not provide such a report, the bank shall require that the funds be returned to i t for redistribution to other organization(s) approved to receive funds.
13. Southport shall not be entitled a set-off, or any other reduction, of the amount of payments to affected persons because of any debts owed by the identified persons. The bank also shall not refuse to make a pay ment based on a release of legal claims or loan modification previously signed by any affected persons.
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IV. EVALUATING AND MONITORING COMPLIANCE 14. For the duration of thsi Order, Southport shall retain all records
relating to its obligations hereunder as well as its compliance activities as set forth herein. The United States shall have the right to review and copy such records upon request.
15. Within six months of the effective date of this Order, Southport shall submit a report to the United States on the bank's progress in establishing and implementing each of the remedial items specified in this Order. A second report shall be filed on the first anniversary of this Order. Thereafter, Southport shall submit a report on each subsequent anniversary of the date of the Order for the term of the Order describing the actions taken in compliance with the provisions of the Order. The report shall include an objective assessment of the extent to which each quantifiable obligation was met, an explanation of why any particular component fell short of meeting the goal for that year, and any recommendations for additional actions to achieve the goals of this Order. V. ADMINISTRATION
16. The Order shall termi nate (a) three (3) months after the submission of So uthport's third annual repor t to the United Stat es. Notwithstanding the above, this Order may be extended upon further motion of the United States to the Court, for good cause shown.
17. Any time limits for performance fixed by this Order may be extended by mutual written agreement of the parties. Additionally, details related to administration of the Settlement Fund as set forth in Paragraphs 9-10 can be modified by mutual written agreement of the parties. Other modifications to this Order may be made only upon approval of the Court,
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by motion by either party. The parties recognize that there may be changes in relevant and material factual circumstances during the term of this Order that may impact the accomplishment of its goals. The parties agree to work cooperatively to discuss and attempt to agree upon any proposed modifications to this Order resulting therefrom.
18. In the event that any disputes arise about the interpretation of or compliance with the terms of this Order, the parties shall endeavor in good faith to resolve any such dispute between themselves before bringing it to this Court for resolution. The parties agree that if it either reasonably believes that the other party failed to comply with any obligation under this Order, it shall provide written notice thereof and allow a period of at least thirty (30) days to discuss a voluntarily resolution of the alleged violation before presenting the matter to this Court. In the event of either a failure by the bank to perform in a timely manner any act required by this Order or an act by Southport, in violation of any provision hereof, the United States may move this Court to i mpose any remedy authorized by law or eq uity, including attorneys' fees and costs.
19. The parties agree that, as ofthe date of the entry of this Consent Order, litigation is not "reasonably foreseeable" concerning the matters described above. To the extent that either party previously implemented a litigation hold topreserve documents, electronically stored information (ESI), or things related to t he matters described above, the party is no long er required to maintain such litigation hold. Nothing in this paragraph relieves either party of any other obligations imposed by this Order.
20. Nothing in this Order shall excuse the bank's compliance with any currently or subsequently effective provision of law or order of a
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regulator with authority over Southport that imposes additional obligations on the bank.
21. Southport's compliance with the terms of this Order shall fully and finally resolve all claims of the United States relating to the alleged violation of the fair lending laws by means of discriminating on the basis of race and national origin, as alleged in the Complaint in this action, including all claims for equitable relief and monetary damages and penalti es. Each party to th is Consent Order shall bear its own costs and attorney's fees associated with this litigation.
22. The Order does not create any third-party beneficiaries. 23. The Court shall retain jurisdiction for the duration of this Consent Order to enforce the terms of the Order, after which time the case shall be dismissed with prejudice. SO ORDERED. Dated at Milwaukee, Wisconsin, this 11th day of October, 2013.
BY THE COURT:
J.P. Stadtmueller U.S. District Judge
Page 11 of 11 Case 2:13-cv-01086-JPS Filed 10/11/13 Page 11 of 12 Document 3

APPENDIX A
RELEASE
In consideration for the parties' agreement to the terms of the Consent Order entered in Uni ted States v. S outhport Bank (E.D. Wi s.), and the payment to me of $___________, pursuant to the Consent Order and effective upon that payment, I hereby release and forever discharge all claims, rights, remedies, and recoveries related to the facts of credit discrimination in the origination of wholesale mortgage loans at issue in the matter referenced above, and release and forever discharge all claims, rights, remedies, and recoveries arising from credit discrimination alleged in t hat matter in connection with the origination, pricing, terms, and conditions of my loan(s), known and unknown, up to and including the date of execution of this release.
I understand that t his releases those claims, rights, remedies and recoveries against Southport Bank, and against any and all related entities, parents, predecessors, successors, subsidiaries, and affiliates, and against any and all of the ir past and present directors, offi cers, agents, managers, supervisors, shareholders, and em ployees and their hei rs, executors, administrators, successors in interest, or assigns.
Executed this _____ day of _____________, ______.
__________________________________ Signature
__________________________________ Print Name
__________________________________ Address
Case 2:13-cv-01086-JPS Filed 10/11/13 Page 12 of 12 Document 3

 
 United States District Court Eastern District of Wisconsin (Milwaukee) CIVIL DOCKET FOR CASE #: 2:13−cv−01086−JPS

ATTYOPEN

United States of America v. Southport Bank Assigned to: Judge J P Stadtmueller Cause: 42:405 Fair Housing Act
Plaintiff United States of America

Date Filed: 09/26/2013 Jury Demand: None Nature of Suit: 443 Civil Rights: Accommodations Jurisdiction: Federal Question
represented by Nancy Fay Langworthy United States Department of Justice (DC) 1800 G Street NW − Ste 7002 Washington, DC 20006 202− 616−8925 Fax: 202− 514−1116 Email: nancy.langworthy@usdoj.gov LEAD ATTORNEY ATTORNEY TO BE NOTICED
Matthew Dean Krueger United States Department of Justice (ED−WI) Office of the US Attorney 517 E Wisconsin Ave − Rm 530 Milwaukee, WI 53202 414−297−1700 Fax: 414−297−1738 Email: matthew.krueger@usdoj.gov ATTORNEY TO BE NOTICED

V. Defendant Southport Bank

Date Filed 09/26/2013 09/26/2013 09/26/2013
10/11/2013

# Docket Text
1 COMPLAINT against Southport Bank by United States of America. (Attachments: # 1 Civil Cover Sheet)(Krueger, Matthew)
2 MOTION to File Proposed Consent Order by United States of America. (Attachments: # 1 Proposed Consent Order)(Krueger, Matthew)
NOTICE Regarding assignment of this matter to Judge J P Stadtmueller; Consent/refusal forms for Magistrate Judge Joseph to be filed within 21 days; the consent/refusal form is available on our web site. (lls)
3 CONSENT ORDER signed by Judge J P Stadtmueller on 10/11/13 resolving the claims of the United States that Southport Bank has engaged in a pattern or practice of lending discrimination in violation of the Fair Housing Act and the Equal Credit Opportunity Act. See Order. (cc: John Delionado for Southport Bank, all counsel)(nm)

Case: 2:13-cv-01086-JPS As of: 02/02/2014 08:07 PM CST 1 of 1