On October 15, 2024, the Department of Justice (DOJ) and the Consumer Financial Protection Bureau (CFPB) announced a settlement with Fairway Independent Mortgage Corporation following allegations of discriminatory lending practices, or redlining, in predominantly Black neighborhoods in Birmingham, Alabama. As part of the resolution, Fairway agreed to pay $8 million in relief and a $1.9 million civil penalty to address claims that it avoided providing credit services in these communities due to residents’ race and national origin.
The settlement contributes to the DOJ’s broader efforts through the Combating Redlining Initiative, which has secured over $150 million in relief since its inception. According to the DOJ’s findings, Fairway concentrated its retail loan offices in majority-white areas and allocated less than 3% of its direct mail advertising to Black neighborhoods. Fairway’s lending rates in these areas were significantly lower than peer lenders, prompting the DOJ and CFPB to act.
In addition to financial penalties, the settlement requires Fairway to establish a $7 million loan subsidy program aimed at providing affordable loans for home purchases, refinances, and improvements in Black communities. Fairway will also invest $1 million in programs to support consumer education, outreach, and partnerships with local organizations. The enforcement action underscores the government’s commitment to rooting out lending discrimination nationwide.
The initial complaint filed by the CFPB against Fairway Mortgage, is below.
