Feds Get AIG Units To Cough Up $7.1M To Settle Race-Based Discrimination Claims In Home Mortgage Lending Practices

The Washington Post reports:

• Two AIG units settled federal charges that they discriminated against black home buyers on fees for mortgages and will pay $7.1 million for restitution and education efforts, the U.S. Justice Department said.(1)

• The units, AIG Federal Savings Bank and Wilmington Finance Inc, will provide $6.1 million to about 2,500 borrowers in at least 19 major metropolitan cities who were affected by the alleged discrimination, according to the department. "This sort of practice is what I often call discrimination with a smile, because I would predict that many of the victims that we will contact will have no idea that they were victimized," said Thomas Perez, head of the Justice Department's civil rights division.

• Blacks were charged fees by mortgage brokers that were on average one-fifth of a percentage point higher than whites for the mortgages, which were all subprime loans, Perez said. The victims will receive on average about $2,300 back. He also said that there were some 45 lending discrimination cases pending.

For more, see AIG units settle mortgage discrimination case.

(1) The settlement was filed in conjunction with a civil lawsuit brought under the federal Fair Housing and Equal Credit Opportunity Acts, which alleges African American borrowers nationwide were charged higher fees on wholesale loans. For the U.S. Department of Justice press release, see Financial Fraud Enforcement Task Force Announces Settlement with AIG Subsidiaries to Resolve Allegations of Lending Discrimination.