Banc One settles fair lending complaint in Arizona

Late last year, the Arizona Attorney General's Office and Banc One Mortgage Corporationreached a Memorandum of Understanding (MOU) that resolved fair lending claims lodgedagainst Banc One. The December 1997 MOU creates a $5 million loan program that will helplow to moderate income home buyers. The MOU also calls for Banc One to pay $75,000 to theArizona Attorney General's Office for its investigation and its continued monitoring.

Newloan program to target Spanish speakers in Arizona town

The mortgage program, which will specifically target Spanish-speaking home buyersin Yuma, will allow loan applicants to finance a home with a 3 percent down payment. Underthe program, Banc One will provide the down payment to the applicants.

Banc One will also designate a Spanish-speaking loan officer to be the point person forthe program. This loan officer will be called the "Community Lending LoanOfficer" and will be trained in what the MOU calls "low to moderate incomeproducts." The Banc One loan program was set to begin in January 1998.

Hispanic customers complained to Arizona Attorney General after being rejected bylender

In 1995 and 1996, the Arizona Attorney General's Office received complaints fromHispanic citizens who had applied for mortgages from Banc One at its office in Yuma. Thecomplainants alleged that

A Nationwide agent told an African-American tester that a new home which was purchasedfor $54,900 was only worth $38,000, did not give a quote for insurance, or offer to sellthe tester a policy;

White testers were offered five or ten percent discounts if they had both auto andhomeowners' policies with Nationwide while African-American testers were not informedabout these discounts; and

White testers consistently received written quotes by mail while African-Americantesters did not.

Other defendants in the Lexington suit include Banc One had discriminated against thembecause they were Hispanic. The Office of the Attorney General began an investigation intothe complaints. The investigation covered loans made in 1995 and 1996.

According to Banc One's own records, the lender knew that there were problems and wasworking on improving customer relations when the complaints were filed. Banc One claimedto be in the process of improving and enhancing its customer service system in Yuma. Thesepreviously planned enhancements were incorporated into the MOU.

Under the provisions of the MOU, Banc One will operate their low to moderate income(LMI) program for two years or until they exhaust the $5 million fund. Banc One isresponsible for marketing the program to low and moderate income home seekers with theintent of completing it within two years.

Lender will make loan documents and customer service available in Spanish

Banc One agreed to set up a toll-free hotline for the LMI program. The hotline willbe available to all Arizona applicants. Banc One will ensure that Spanish-speakingoperators are available on the hotline. Banc One will include Spanish information sheetsin its loan applications and will make all of its application documents made available inSpanish.

Finally, under the agreement, Banc One agreed to train all of its Arizona employees infair lending laws, submit semi-annual reports to the Office of the Attorney General, andsubmit to monitoring for two years.