Loan officers referred to Ensley, Tarrant as the “ghetto,” according to the federal settlement

The company’s employees pay almost 10 million dollars in settlement over redlining allegations The emails referred to Ansley and Tarrant as “ghetto,” according to documents filed last week in federal court.

Last week, the Department of Justice and the Consumer Protection Bureau (CFPB) announced that Fairway Independent Mortgage Corp. agreed to pay $8 million and a $1.9 million penalty to settle allegations of repeat lines or credit discrimination.

The Ansley developer said redlining in Black Birmingham communities like his is nothing new.

“This is not the only bank doing this and everyone knows it,” Brian C. Rice, president of the Ensley Business Alliance, wrote on Facebook.

Headquartered in Madison, Wisconsin, Fairway operates in the Birmingham area under the trade name MortgageBanc.

The Justice Department and the CFPB alleged that Fairway used marketing and sales promotions to discourage black residents from applying for mortgage loans.

Fairway will provide $7 million for a subsidized loan program to offer affordable loans for home purchases, refinances and home improvements in predominantly black neighborhoods in Birmingham.

It will also invest $1 million in programs to support this loan subsidy fund and pay a civil penalty of $1.9 million to the CFPB’s victim assistance fund.

In a statement, Fairway said it “hopes these efforts will further expand lending opportunities for those looking to purchase real estate in Birmingham’s black-majority census tracts.”

The company’s own records have shown it has been unable to serve black neighborhoods since at least 2017, according to the Justice Department. Until October 2022, it has not taken any significant action to address the risk of the red line.

According to the federal complaint, from at least 2018 to 2020, several Fairway employees, all of whom were white, used derogatory language in their company email in reference to areas of metro Birmingham that are majority black or have a high black population.

For example, in a 2018 email chain between two loan officers at a company, one of the leading manufacturers in the Birmingham area referred to the applicant’s friends as “thug friends”.

“(We) don’t need him as a client. He is a disaster waiting to happen,” the email reads. “I referred him to a realtor in (Trussville)… he showed up drunk with 4 of his thug friends and showed (his) ass.” The document states that while the email does not mention the individual’s race, records show that the person who applied for the loan was black and withdrew his application that year.

An April 2018 email involving a mortgage and loan officer mentions “Tarrant ghetto” in the subject line. From 2018 to 2021, Tarrant did not apply for a mortgage at Fairway.

In a May 2020 email chain between a “best” loan officer and a loan officer, the loan officer wrote, “Ansley is a GHETTO. I promise we don’t have a house there. LOL!” The processor replied, “ROFLOL.” From 2018 to 2021, there were no mortgage applications from Ensley for Fairway, according to the documents.

In a statement, Fairway said the complaint filed “materially mischaracterizes the issue at issue and appears to be intentionally inflammatory in nature.” The company countered that it accepted more loan applications and made more loans, in terms of loan units, in black-majority census tracts than any other non-bank lender with a physical presence in the Birmingham metro area.

Fairway also said the government’s analysis focused on “white/black census tract lending quotas, not the actual volume of applications and originations in black-majority census tracts.”

“First, the complaint characterizes Fairway’s actions as willful and reckless, a claim that was mutually rejected by the parties pending settlement,” the company said. “Furthermore, the complaint characterizes Fairway’s actions as intentional and willful, even though government agencies have been unable to find any evidence to support such a claim.”

In court filings, federal officials said that between 2018 and 2022, Fairway made 7,913 HMDA reportable loans in the Birmingham area, but only 3.3 percent of those were for properties in predominantly black neighborhoods. In high-black neighborhoods, the percentage was 0.4% of Fairway loans over the same period.

And in areas with a majority black population, an average of only 37.8 percent of Fairway loans went to black-identified applicants, meaning the majority of applicants were less likely to be black, according to court documents.

Rice said he had read the court filings and was particularly concerned about the email comments. In a Facebook post, he wrote: “We are watching our death. Our communities are suffering.”

In an interview, Rice said of the settlement find, “It showed me that it was intentional, that places like Ensley don’t have loans, and you can see that all over the city. I wish more people knew how worrisome the red line is. It hurts a lot of people, and a lot of people are used to it.”

He said he was encouraged by the loan subsidy program and that as part of the settlement, Fairway would have to locate a loan or retail office in the predominantly black area of ​​metro Birmingham.

“I think it will be great to see them here because there are mortgage bankers that I’ve talked to locally that don’t have enough products to reach people,” he said. “I think this is a start.”

George McCall, president of the Ensley Neighborhood Association, said he’s not sure why anyone calls Ensley a ghetto.

“Living in the neighborhood where we live, I don’t think of it as a ghetto,” he said. “I understand that not everyone lives in a big mansion, or if the grounds are not kept clean… We have some very nice homes in the area. If you’ve never been there to see what these areas look like, no matter what people tell you, you’ll believe it.”

He is also optimistic that the settlement could change not only Fairway’s attitude, but also the outlook for other banks.

“When you see that you can be held accountable, you can do better,” he said.