Feds Sue First United Bank for Charging Hispanic Borrowers Higher Interest Rates
First United Bank charged Hispanic borrowers higher interest rates, says a federal complaint filed against the bank.
Federal prosecutors claim the Texas-based bank discriminated against Hispanic borrowers when they charged them higher interest rates based on their national origin, a violation of Equal Credit Opportunity Act.
Courthouse News reported that before May 2013 the bank did not have a uniform pricing system or specific pricing guidelines, allowing loan officers to have broad subjective discretion when setting interest rates for unsecured loans.
The complaint states that the bank made 560 unsecured consumer loans to Hispanic borrowers between 2008 and 2012.
The rates for these loans were, on average, 205 basis points higher than the rates charged to non-Hispanic borrowers. When accounting for credit risk factors, the rates were 142 basis points higher.
The bank also allegedly failed to provide training to its loan officers and properly supervise them to ensure they were following federal lending laws which bar discrimination based on national origin.