HUD garners huge settlements from two Texas lenders

Just weeks after announcing a record-breaking mortgage lending settlement with three Texasbanks, the US Department of Housing and Urban Development (HUD) has struck again. In Marchand April, HUD negotiated the highest settlement of mortgage lending discriminationallegations in history with one lender and a $42.5 million settlement with another.

Thelarger settlement, reached in late March, is a conciliation agreement signed by AccuBancMortgage Corporation which targets $2.1 billion in mortgages to minorities and low andmoderate income families to enable them to become homeowners. That program will continuefor three years.

In the other settlement agreement, which was reached in early April, SFM MortgageCorporation has agreed to target $42.5 million in home mortgage loans to minorities andlow- and moderate-income families in the Dallas-Fort Worth area of Texas over the nextthree years.

AccuBank will spend $24 million in down payment assistance to low and moderateincome applicants

AccuBanc agreed to spend $24 million over the next three years in mortgage closing costassistance to enable more minorities and low and moderate income borrowers to receivemortgages. Fair housing agencies expect more than 15,700 families will receive mortgagesbecause of the agreement. Dallas-based AccuBanc makes mortgage loans in all 50 states. Thelender agreed to train its staff in fair lending and diversity issues and to createprograms to attract more minority and low and moderate income borrowers.

The record-setting $2.1 billion settlement with AccuBanc resulted from two lendingdiscrimination complaints against the lender filed in Texas with HUD by the Fort WorthHuman Relations Commission and the City of Dallas.

Fort Worth Human Relations Commission study uncovered discrimination with pairedtesters

Whites and minorities conducted tests of the lender posing as applicants for homemortgage loans. One test in Dallas showed that an AccuBanc loan officer told a minoritytester he was eligible for an $85,000 loan, while an AccuBanc officer told a white testerwith a less favorable financial record he was eligible for a loan of $110,000 to $150,000.In another test, AccuBanc told a minority tester he was eligible for a $115,000 loan,while they told a white tester with a similar financial record he was eligible for a loanof up to $150,000. There were similar results in other tests.

In a statement that he signed as part of the settlement agreement with HUD, AccuBanc'sPresident and Chief Operating Officer James Munford wrote the following: "AccuBancrecognizes that the two complaints which were filed against it based on testing resultsshowed treatment by AccuBanc employees toward African-Americans and Hispanics which didnot meet the standards that AccuBanc sets for itself -- actions which may have violatedthe nation's fair housing laws."

The $42.5 million settlement with SFM Mortgage Corporation will help more than 760minority and low and moderate income families receive mortgage loans and become homeowners

One test in the SFM investigation showed that a loan officer told an African-Americantester that he would qualify for a loan of $100,000 while SFM told a white tester he wouldqualify for a loan of $158,000 - even though the African-American tester told the lenderhe had a higher income, a higher down payment, greater savings and less debt than thewhite tester.

"Under this agreement, SFM Mortgage Corporation will help open the door tohomeownership to more hard-working families," HUD Secretary Cuomo said.

In a statement signed as part of the agreement, SFM President Randie Wolzen admittedthat SFM's loan officers had discriminated against minority applicants. The lender alsoagreed to provide loan officers by appointment in neighborhoods of Fort Worth that arepredominantly African-American and Hispanic.

The settlement with SFM, which is based in Bedford, Texas, is part of the third wave offair lending settlements resulting from discrimination complaints filed by the Fort WorthHuman Relations Commission, which receives HUD funding.