Mortgage Lender Hit with $9 Million Penalty in Redlining Case

Fairway Mortgage discriminated against borrowers in Birmingham

A mortgage lender is facing nearly $9 million in civil penalties as a result of an investigation that found a pattern of discrimination in mortgage loans offered in Birmingham, Alabama.

The Consumer Financial Protection Bureau (CFPB) and Department of Justice (DOJ) allege that Fairway Independent Mortgage Corporation illegally redlined Black neighborhoods, including through its marketing and sales actions. Fairway’s actions discouraged people from applying for mortgage loans in the Birmingham metropolitan area’s Black neighborhoods.

A settlement in the case would require Fairway to pay a $1.9 million civil penalty and also establish a $7 million fund to support affordable home loans in Birmingham.

“The CFPB and DOJ are holding Fairway accountable for redlining Black neighborhoods,” said CFPB Director Rohit Chopra. “Fairway’s unlawful redlining discouraged families from seeking loans for homes in Birmingham’s Black neighborhoods.”

Fairway Independent Mortgage Corporation is a non-depository mortgage company headquartered in Madison, Wisconsin. Fairway operates in the Birmingham area under the trade name MortgageBanc. In 2023, Fairway was the nation’s third largest mortgage lender, receiving over 100,000 applications and originating over $24 billion in loans. It is a closely held company and Steve Jacobson is the majority owner.

Photo byJakub ŻerdzickionUnsplash