1.Key Findings from the DOJ’s Complaint

The DOJ’s complaint paints a concerning picture of lending practices that discouraged Black and Hispanic borrowers. The Mortgage Firm’s Home Mortgage Disclosure Act (“HMDA“) data, as well as branch locations and marketing strategies, revealed systemic shortfalls when it came to serving communities of color. The company did not implement adequate fair lending policies or procedures, and employees allegedly exchanged offensive emails—problems that went largely unaddressed by management for extended periods.

2.HMDA Data and Lending Disparities

A central focus of the complaint is the stark disparity in The Mortgage Firm’s lending practices compared to the demographics of the Miami MSA. While Miami’s MSA consists of 64% majority-Black and Hispanic census tracts, only about 30% of the firm’s applications and loans originated from these areas. Peers operating at a similar or even smaller volume averaged around 59% of their applications in minority census tracts, suggesting that The Mortgage Firm’s proportions were nearly the inverse of the region’s demographics. The disparity was even greater in neighborhoods where more than 80% of residents were Black or Hispanic, with only 5.6% of the firm’s applications coming from those areas, versus 26.9% among peers. Moreover, in majority-Black and Hispanic areas, the percentage of white borrowers applying through The Mortgage Firm (42%) far exceeded the average (19%) for peer lenders, indicating a significant imbalance in the firm’s outreach and lending to minority communities.

3.Lender Branches, Marketing, and Diversity Concerns

According to the DOJ, The Mortgage Firm operated most of its branches in majority-white areas without directing, training, or incentivizing loan officers to expand outreach in minority communities. The company also failed to monitor or document where marketing materials were being distributed, and the website offered no Spanish translation or clear guidance on which offices could serve Spanish-speaking borrowers—despite Miami’s population being 45% Hispanic.

Employee diversity was another challenge. Of 46 loan officers in the Miami MSA, none were Black, and while 15 were Hispanic, only four remained at the lender for at least a year. Meanwhile, 30 of 31 white loan officers stayed on for more than one year. The DOJ pointed out that the firm lacked formal policies for recruiting loan officers in minority areas and that its online presence, featuring mostly white employees, could actively discourage minority borrowers.

4.Offensive Communications and Slow Discipline

The complaint highlights multiple instances where employees shared or wrote offensive emails using terms such as “n-word,” “ghetto,” and “hood” to describe borrowers or neighborhoods. Management was slow to take action, particularly when high-performing loan officers were involved. In some cases, it took over nine months to issue written warnings, revealing a culture that tolerated discriminatory language and attitudes.

5.The Consent Order Requirements

Under the settlement, The Mortgage Firm must undertake several key actions designed to eliminate discriminatory practices and ensure fair lending. First, the company is required to conduct a robust community needs assessment, focusing on the credit needs of Black and Hispanic neighborhoods in the Miami MSA; the findings from this assessment must inform more focused marketing and outreach strategies. Second, the firm must create and maintain a $1.75 million fund dedicated to loan subsidies, including down payment and closing cost assistance, as well as payment of initial mortgage insurance premiums for eligible borrowers in minority areas.

The consent order also mandates a thorough review and enhancement of the company’s fair lending programs, including training, advertising, and the appointment of a Director of Community Lending to oversee these initiatives. As part of expanding its advertising and outreach, The Mortgage Firm must open at least one branch in a majority-Black and Hispanic neighborhood in Miami-Dade County, translate its website into Spanish, and ensure that branch loan officers actively market to majority-Black and Hispanic neighborhoods. Additionally, the settlement requires the company to organize four outreach events and six financial education events annually, partnering with at least one community organization in the Miami MSA to better connect with residents.

6.Lessons for Lenders and Next Steps

The Mortgage Firm’s settlement demonstrates the DOJ’s continued commitment to rooting out redlining and other forms of discriminatory lending, particularly as independent mortgage bankers claim a larger share of the mortgage market. Lenders should closely scrutinize their HMDA data, branch locations, marketing efforts, and workforce diversity to ensure equitable access to credit for all borrowers.

By proactively addressing fair lending gaps—such as offering bilingual resources, training staff on inclusive marketing practices, and immediately disciplining discriminatory conduct—lenders can reduce their legal and reputational risks. With the DOJ’s Combatting Redlining Initiative still in full force, now is the time to affirm your organization’s dedication to fair lending and compliance, safeguarding both your borrowers and your bottom line. If you have questions or need guidance, feel free to reach out to our team for support.