A Columbus mortgage company will compensate African-Americans who paid higher prices for home mortgage loans than equally qualified whites in the Cleveland area, under an agreement reached in October with the Justice Department.
The Department began reviewing the lending practices of Huntington Mortgage Company in August 1994. Under the settlement, the company will set up a $420,000 compensation fund for African-Americans, implement new monitoring and oversight systems, and cha nge its policies to ensure uniform pricing without regard to race.
In a complaint, filed with the settlement in U. S. District Court in Cleveland, the Justice Department alleged the company engaged in racial discrimination in the pricing of mortgage loans in violation of the Fair Housing Act and the Equal Credit Opportunity Act. The court must still approve the settlement.
Assistant Attorney General for Civil Rights, Deval L. Patrick, claimed that the mortgage company charged African-Americans higher up-front fees -- called "overages" -- for mortgages than similarly-situated white borrowers. The alleged discriminatory pra ctices occurred over a two-year period ending in September, 1993.
Generally, an "overage" refers to certain fees, other than the interest rate, paid by the borrower in excess of any minimum price set by a financial institution. Many loan officers have the discretion to charge a fee higher than the minimum. Any amount obtained above the minimum price is an "overage". Loan officers typically receive some or all of the overage they charge.