Case 1:13-cv-01214-AJT-JFA Document 7 Filed 10/02/13 Page 1 of 15 PageID# 51
IN THE UNITED STATES DISTRICT COURT EASTERN DISTRICT OF VIRGINIA
UNITED STATES OF AMERICA.AMERICA, ) ) Plaintiff.Plaintiff, ) CIVIL ACTION NO. 1\ ',\3{;J"itf-QO' \9f\H;l}~ ) v. ) ) CHEVY CHASE BANK.BANK, F.S.BF.S.B., •• ) through its Successor Successorin in Interest.Interest, ) ) DefendantDefendant. ) )
SETTLEMENT AGREEMENT AND ORDER
I. INTRODUCfIONINTRODUCTION
This Settlement Agreement and Order("Agreement")Order ("Agreementtt) resolves the claims in the United
States' Complaint that,that. during and between 2006 and 2009, Chevy Chase Bank.Bank, F.S.B. ("Chevy
Chase Bank") engaged in a pattern or practice of discrimination on the basis ofofrace race and national
origin in residential mortgage lending in violation of the Equal Credit Opportunity Act
("ECOA"),("ECOAtt). 15IS U.S.C. §§ 1691-169If.1691-1691 f, and andthe the Fair Housing Act ("FHA"),("FHAtt), 42 U.S.C. §§ 3601-
3619. In 2009. 2009, Chevy Chase Bank was acquired by Capital One,One. N.A. ("Successor"),(··Successor"). which is
the successor in interest to Chevy Chase Bank.
There has been no factual finding or adjudication with respect to any matter alleged by
the United States. The parties have entered into the Agreement to avoid the risks,risks. expense, and
burdens of litigation and to resolve voluntarily the claims claimsin in the United States' Complaint. Case 1:13-cv-01214-AJT-JFA Document 7 Filed 10/02/13 Page 2 of 15 PageID# 52
II. BACKGROUND
In February 2009, the Office of the Comptroller of the Currency ("'OCC") conducted an
analysis of Chevy Chase Bank's home mortgage lending activity in connection with the sale of
Chevy Chase Bank to Successor. As a result of its review, the OCC determined that it had
reason to believe that Chevy Chase Bank had engaged in a pattern or practice of discrimination
on the basis of race, color, and ethnicity, in violation of the FHA and the ECOA. Pursuant to 15
U.S.C. § 1691 e(g), the OCC referred the matter to the United States Department of Justice on
September 24.2010.
In its Complaint, the United States alleges that between 2006 and 2009, Chevy Chase
Bank engaged in a pattern or practice of discrimination on the basis of race and national origin in
violation of both the FHA and the ECOA. Specifically. the United States claims that between
2006 and 2009, Chevy Chase Bank's business practice allowed its employees who originated
loans through its retail channel to vary a loan's interest rate and other fees from the price initially
set based on a borrower's objective credit-related factors. The United States alleges that this
subjective and unguided.pricing discretion resulted in African-American and Hispanic borrowers
paying more - not based on borrower risk - than White borrowers.
In addition, the United States claims that between 2006 and 2007, Chevy Chase Bank's
policies gave third party mortgage brokers that submitted loans to Chevy Chase Bank's
wholesale channel for origination the discretion to vary the interest rates, fees, and costs paid by
borrowers. The United States alleges that these discretionary charges were not related to the
borrower's credit risk or objective qualifications, and that the discretion resulted in African American and Hispanic borrowers who received loans through Chevy Chase Bank's wholesale
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lending channel paying higher interest rates, fees and costs than similarly-situated white
borrowers.
Following its acquisition of Chevy Chase Bank, Successor voluntarily made payments to
279 Chevy Chase Bank borrowers to compensate them for overcharges that Successor had
identified in connection with a review of Chevy Chase Bank's lending data.
The United States' claims against Chevy Chase Bank relate solely to loans originated by
Chevy Chase Bank prior to Successor's acquisition of Chevy Chase Bank, and do not relate to
any mortgage lending practices of Successor. Successor denies all of the allegations and claims
as set forth in the United States' Complaint.
Successor has represented to the United States that Successor and its subsidiaries do not
originate and price loans employing policies and procedures that the United States alleges
resulted in the discriminatory practices at issue in the Complaint. The Agreement does not
contain any injunctive measures with respect to the current operations of Successor or any of its
subsidiaries.
III. REMEDIAL ORDER
J. The Effective Date of the Agreement will be the date on which it is approved and
entered by the Court.
2. Successor will deposit in an interest-bearing escrow account the tOlal sum of
$2,850,000 to compensate for monetary damages that borrowers nationwide who obtained a loan
through Chevy Chase Bank may have sutTered as a result of the alleged violations of the FHA
and the ECOA (the "Settlement Fund"). Title to this account will specify that it is "for the
benefit of affected borrowers pursuant to Agreement of the Court in United States v. Chevy
Chase Bank, F.S.B." Successor will provide written verification ofthe deposit to the United
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States within 5 days of the Effective Date of the Agreement. Any interest that accrues will
become pan of the Settlement Fund and be utilized and disposed of as set fonh herein.
3. Within thirty days of the Effective Date of the Agreement, Successor shall enter
into a contract retaining a Settlement Administrator (UAdministrator"), subject to approval by the
United States, to conduct the activities set forth in Paragraphs 5 through IO. Successor shall bear
all costs and expenses of the Administrator. Successor's contract with the Administrator shall
require the Administrator to comply with the provisions of the Agreement as applicable to the
Administrator.' The Administrator's contract shall require the Administrator to work
cooperatively with the United States in the conduct of its activities, including reporting regularly
to and providing all reasonably requested infonnation to the United States. The Administrator's
contract shall require the Administrator to comply with all confidentiality and privacy
restrictions applicable to the party who supplied the infonnation and data to the Administrator.
The Administrator's contract shall require the Administrator, as part of its operation, to establish
cost-free means for affected borrowers to contact it, including an email address. a toll-free
telephone number. and means for persons with disabilities to communicate effectively, including
TTY. The Administrator's contract shall require the Administrator to provide Spanish language
translations by a certified translator of all documents sent to affected borrowers. The United
States must be provided with translated documents at least 20 days before they are finalized if
there are more than three documents being submitted for approval or pending approval at once,
In the event that the United States has reason to believe that the Administrator is not materially complying with the tenns of ilS contract with Successor. the United States and Successor shall meet and confer for the purpose of mutually agreeing upon a course of aClion 10 effect the Administrator's material compliance with its connct with Successor. In the event th8tthe United States and Successor are unable 10 agree upon a course of action to effect the Administrato,'s material compliance with its contract with the Successor, the panies shall present the mailer 10 the Court.
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or IS days before they are finalized if there are three or fewer documents. and must approve all
translations. The Administrator's contract shall require the Administrator to provide Spanish
language interpretations for telephone and email communications with affected borrowers.
including Spanish language operators for the toll free telephone number. The Administrator will
neither detennine who is an affected borrower nor detennine the amount of damage to be
received by any affected borrower.
4. Within 30 days of the Effective Date of the Agreement. the United States shall
provide to Successor a list of loans originated to African-American and Hispanic borrowers
allegedly affected by the conduct alleged in the Complaint, and the initial estimate of the amount
each allegedly affected borrower (hereinafter "Borrower") will receive from the Settlement Fund
for each of the loans affected by the conduct alleged in the complaint. if all Borrowers choose to
participate. The United States shall base these initial estimates on the loan fees and costs of the
individual loans. No individual may request that the Court or the Administrator review the
identification of Borrowers or the amount to be received.
S. Within 15 days after the United States provides the list of loans referenced above.
Successor will provide to the United States and the Administrator the name, property address,
mailing address. and Social Security number for each borrower on each listed loan. Such
infonnation and data shall be used by the United States and the Administrator only for the law
enforcement purposes of implementing the Agreement. Successor shall supply the requested
infonnation that is within its control, or the control or any affiliated entity. To the extent that the
requested data is not within the control of those parties, Successor shall supply any data within
the control of those parties thut identifies other parties that may have the requested data.
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6. The Administrator's contract shall require the Administrator to adopt effective
methods, as have been agreed to by the parties, to locate each identified Borrower, to inform
each identified Borrower of his or her right to receive a payment from the Settlement Fund no
smaller than the amount calculated by the United States pursuant to Paragraph 4, and to confirm
his or her identity and willingness to release his or her individual claims in order to receive a
payment form the Settlement Fund. The Administrator's contract shall require the Administrator
to complete this responsibility and provide to the United States a list of Borrowers who have
confirmed their identities and willingness to release individual claims within a period or90 days
from the date the Successor provides the information described in Paragraph 5, subject to an
extension of time as provided by Paragraph 18.
7. For each Borrower who confirms his or her identity and willingness 10 release
individual claims pursuant to Paragraph 6, the United States shall specify the final amount each
such Borrower shall receive from the Settlement Fund ("Final Payment Amount"). The United
States shall provide the list of Final Payment Amounts to the Administrator no later than 30 days
after the Administrator's deadline for locating Borrowers in Paragraph 6 has passed. Final
Payment Amounts are to be paid on a per loan basis; if there is a borrower and co-borrower, they
will share the compensation equally. No individual may request a review by the Court or the
Administrator of the Final Payment Amounts. The parties agree that the total amount of the
Settlement Fund shall not be altered based on the number of Borrowers who confirm their
identity and willingness to release individual claims pursuant to Paragraph 6.
8. The Administrator's contract shall require the Administrator to send a release, including the language set forth in Appendix A. to each Borrower (hereafter. "Release"), Each
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Release shall list the Final Payment Amount. Any Borrower may decline all benefits from the
Agreement, including a payment from the Settlement Fund, by not returning the Release. The
Agreement does not affect the legal rights of any Borrower who does not return the Release or
any individual not included on the list of Borrowers. The parties agree that the amount of the
Settlement Fund shall not be altered based on the number of Borrowers who return a Release.
9. The Administrator's contract shall require the Administrator to deliver payment to
each Borrower of the Final Payment Amount within 10 days of its receipt of a validly executed
Release from the Borrower. For loans with a borrower and a co-borrower, or more than one co
borrower, each borrower and co-borrower must sign the Release in order for the Release to be
valid; the Release may be separately signed in counterparts.
10. The Administrator's contract shall require the Administrator to set forth
deadlines, subject to approval of the United States, so that the compensation is distributed and
checks are presented for payment or become void prior to the date that is 6 months from the date
the United States provides the Final Payment Amount to the Administrator in accordance with
Paragraph 7.
II. The details in administration of the Settlement Fund set forth in Paragraphs 3·10
can be modified by agreement of the parties and without further Court approval. Payments from
the Settlement Fund to Borrowers shall be subject to the following conditions:
(a) No Borrower shall be paid any amount from the Settlement Fund until he or she
has executed and delivered to the Administrator a Release, including the language set forth in
Appendix A; and
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(b) The total amount paid by Successor to the Borrowers collectively shall not exceed
the amount of the Settlement Fund. including accrued interest.
J2. All money not distributed to Borrowers from the Settlement Fund. including
accrued interest. shall be distributed to one or more organizations that provide services including
credit and housing counseling (including assistance in obtaining loan modification and
preventing foreclosure). legal representation of borrowers seeking to obtain a loan modification
or to prevent foreclosure, financial literacy, and other related programs targeted at African
American and Hispanic potential and former homeowners in communities where the Complaint
aUeges significant discrimination occurred against African-American and Hispanic borrowers
("'Organization"). Before selecting the qualified Organization(s). Successor will obtain proposals
from the Organization(s) on how the funds will be used consistent with the above-stated purpose,
submit such proposal to the United States. and consult with and obtain the non-objection of the
United States. Successor will submit the proposals from the Organization(s) to the United States
within 30 days of the date that the Administrator completes the delivery of the payments under
Paragraphs 9 and 10. and the United States shall respond to Successor's request for non
objection within 10 days of Successor's request. The United States and Successor may request
modification of the proposal before approving the Organization(s). Organization(s) must not be
related to Successor. Successor's parent, or any entity owned by Successor's parent.
13. The parties shall obtain the Court's approval for the Organizations and the amount
to be distributed to each prior to distribution provided by Paragraph 12. Within I S days of the
United States' non-objection to the Organizations, the parties shall move the Court to order the distribution of the funds. The parties shall provide the Court with information regarding how the
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proposed organizations meet the requirements set forth in Paragraph 12. Successor shall require
each Organization to submit to Successor and the United States a report detailing that funds are
utilized for the purposes identified in Paragraph 12 within one year after the funds are distributed
and every year thereafter until the funds are exhausted. Failure of any Organization to provide
the report(s) required by Successor shall not affect the termination of this Agreement or serve as
a basis for reopening this case or the Agreement.
14. Successor will not be entitled to a set-off. or a~y other reduction. of the amount of
payments to Borrowers because of any debts owed by the Borrowers. Successor also will not
refuse to make a payment based on a release of legal claims or loan modification previously
signed by any Borrower.
IV. RECORD KEEPING AND REPORTING REOUIREMENTS IS. For the duration of the Agreement. Successor shall retain all records relating to its
obligations hereunder as well as its compliance activities as set forth herein. The United States
will have the right to review and copy such records upon request.
16. Successor shall submit a report to the United States confirming its compliance
with the terms of the Agreement within 15 days after the Court approves distribution to the
Organization(s) in accordance with Paragraph 13.
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v. ADMINISTRATION 17. The Agreement will terminate 3 months after Successor submits its report to the
United States pursuant to paragraph 16. Notwithstanding the above. the Agreement may be
extended further upon motion of the United States to the Court, for good cause shown.
18. Any time limits for performance fixed by the Agreement may be extended by
mutual wrinen agreement of the panics. Other modifications to the Agreement may be made
only upon approval of the Court. upon motion by either party. The parties recognize that there
may be changes in relevant and material factual circumstances during the duration of the
Agreement which may impact the accomplishment of its goals. The parties agree to work
cooperatively to discuss and attempt to agree upon any proposed modifications to the Agreement
resulting therefrom.
19. The Agreement will be binding on Successor, including its officers, employees,
agents, assignees, and successors in interest, and all those in active concert or participation with
2 any of them. In the event Successor seeks to transfer or assign all or part of its operations , and
the successor or assign intends on carrying on the same or simi lar use, as a condition of sale,
Successor will obtain the written accession of the successor or assign to any obligations
remaining under the Agreement for its remaining term.
20. Nothing in the Agreement will excuse Successor's compliance with any currently
or subsequently effective provision of law or order of a regulator with authority over Successor
that imposes additional obligations on Successor.
For purposes of chis paragraph, the requirements relating to the transfer or assignment of"opemtions" do nOI include the transfer or assignment of portions of Successor's portfolio of mortgDgc accounts or receivables 10 an independent third party entity.
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21. The parties agree that, as of the date of entry of the Agreement. litigation is not
"reasonably foreseeable" concerning the matters described in the Agreement. To the extent that
either party previously implemented a litigation hold to preserve documents. electronically stored
information, or things related to the matters described in the Agreement, the party is no longer
required to maintain such a litigation hold. with the exception of documents. electronicallYM
stored information, or other things relating to loans originated by Chevy Chase Bank between
January I. 2006. and December 31, 2009.
22. In the event that any disputes arise about the interpretation of or compliance with
the terms of the Agreement, the parties will endeavor in good faith to resolve any such dispute
between themselves before bringing it to this Court for resolution. If the United States believes
that Successor has violated any provision of the Agreement. it will provide Successor written
notice thereof and allow 30 days to resolve the alleged violation before presenting the matter to
this Court. In the event of either a failure by Successor to perform in a timely manner any act
required by the Agreement or an act by Successor in violation of any provision hereof. the
United States may move this Court to impose any remedy authorized by law or equity.
23. Successor's compliance with this Settlement Agreement shall fully and finally
resolve all claims related to the allegations of the complaint. including under the FHA and
ECOA, that the United States may have against Chevy Chase Bank or Successor relating to
discrimination against AfricanMAmerican and Hispanic borrowers based on racial or national
origin disparities in loan pricing. including without limitation all claims for equitable relief and
monetary damages and penalties arising from those claims, as well as any claims under any other
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.~ ......
lega l theory based on the same allegations of discriminatory conduct addressed in the Complaint,
for retail and wholesale loans originated between January 1,2006, and December 31. 2009.
24. Eaeh pany 10 the Agreement will bear its own costs and auomeys' fees associated
with this litigation.
25. No later than 3 months after Successor submits its repon to the United States in
accordance with Pnragraph 16, the parties will jointly move the Court to dismiss the case with
prejudice.
26. The Court will retain jurisdiction for the duration of the Agreement to enforce the
lenns of the Agreement.
".{ SO ORDERED, this ).. day of 0 cJ; ~ 20 I J,
JUDGE
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The undmigned hereby apply for and consent to the entry orlbe Agreement:
For Plaintiff UDited States of America:
Dated: September 30, 2013 Respectfully submitted,
ERIC H. HOLDER, JR. Attorney General
DANA J. BOENTB JOCELYN SAMUELS Acting United States Attorney Acting Assistant Attorney General Eastern District ofVil'8inia Civil Rights Division 6~ Chief Housing and Civil Enforcement Section CivU Rights Division
~~, ~~6.LC01Y~ AO Assistant United States Attorney Deputy 'ef 2100 Jamieson Avenue LUCY Q. CARLSON Alexandria, VA 22314 Trial Attorney Telephone: 703·299·3817 Civil Rights Division [email protected] u.s. Department ofJustice 950 PCllDSylvania Ave., N.W. Northwestern Building, 7th Floor Wasbiogton, DC 20530 Ph: (202) 30S.0017; Fax: (202) SI4-1 116 lucy,[email protected]
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For Capital ODe, N.A.:
Dated: September 30. 2013 Respectfully submitted, ,ban ~N'o ANAND S. RAMAN JOSEPH L. BARLOON AUSTIN K. BROWN Skadden. Arps. Slate, Meagher & Flam LLP 1440 New York Avenue, N.W. Washington, DC 2000S Ph: (202) 371-7000; Fax: (202) 393-5760 [email protected] Case 1:13-cv-01214-AJT-JFA Document 7 Filed 10/02/13 Page 15 of 15 PageID# 65
APPENDIX A
Release
In consideration for the parties' agreement to the tenns of the Settlement Agreement
entered in United States v. Chevy Chase Bank. F.S.B. through its Successor in Interest
(E.D.VA.), and the payment to me ors pursuant to the Settlement Agreement, 1
hereby release and forever discharge all claims of every type accruing prior to the entry of the
Settlement Agreement. related to the allegations in the litigation referenced above. that I may
have against Chevy Chase Bank. F.S.B. or Capital One. N.A., all related entities, parents,
predecessors, successors, subsidiaries, and affiliates, and all of their past and present directors,
officers, agents. managers, supervisors, shareholders. and employees and their heirs, executors,
administrators, successors, or assigns. I acknowledge that I am aware that J may discover facts
in addition to, or different from, those facts which I now know or believe to be true with respect
to the subject matter of this release, but that I release fully, finally and forever all claims related
to the allegations in the litigation referenced above, notwithstanding the discovery or existence of
any such additional or different facts.
Executed this _ day of ____'
Signature of Borrower Signature of Co-Borrower (if any)
Print Name Print Name
Address Address
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8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 UNITED STATES OF AMERICA, Case No.: 13cv2327-H (RBB) 11 Plaintiff, 12 v. ORDER ENTERING CONSENT 13 PLAZA HOME MORTGAGE, INC., ORDER BETWEEN UNITED 14 STATES OF AMERICA AND PLAZA Defendant. HOME MORTGAGE, INC. 15
16 On September 26, 2013, Plaintiff the United States of America (“the United 17 States”) filed a complaint against Defendant Plaza Home Mortgage, Inc. (“Plaza” or 18 “the lender”). (Doc. No. 1, “Compl.”) On the same day, the parties filed a joint motion 19 for a consent order (“Order”). (Doc. No. 4.) On September 27, 2013, the Court 20 conducted a telephonic hearing regarding the proposed Order. Joseph Price and Coty 21 Montag appeared for Plaintiff United States. John Alessio and Lynde Selden appeared 22 for Defendant Plaza. During the hearing, the Court inquired into the process used to 23 provide notice to aggrieved borrowers. Additionally, the Court inquired into the 24 monitoring program and determined that a three year monitoring period would be 25 appropriate, without prejudice to a request for extension of monitoring by the United 26 States for good cause. 27 This Order was submitted jointly by the parties to resolve the United States’ 28 claims that Plaza has engaged in a pattern or practice of lending discrimination in
Case 3:13-cv-02327-H-RBB Document 8 Filed 10/01/13 Page 2 of 23
1 violation of the Fair Housing Act (FHA), 42 U.S.C. §§ 3601-3619, and the Equal Credit
2 Opportunity Act (ECOA), 15 U.S.C. §§ 1691-1691f, by allowing its wholesale
3 mortgage brokers to charge African-American and Hispanic borrowers higher broker
4 fees for residential real estate-related loans than non-Hispanic white (“white”)
5 borrowers.
6 There has been no factual finding or adjudication with respect to any matter
7 alleged by the United States. Accordingly, the execution of this Order is not, and is not
8 to be considered as, an admission or finding of any violation of the FHA or ECOA by
9 Plaza. Rather, the parties have entered into this agreed Order to resolve voluntarily the
10 claims asserted by the United States in order to avoid the risks and burdens of litigation.
11 The parties agree that full implementation of the terms of this Order will provide a fair
12 and reasonable resolution of the allegations of the United States in a manner consistent
13 with Plaza’s legitimate business interests.
14 II. BACKGROUND
15 Plaza is a nationwide wholesale mortgage lender headquartered in San Diego,
16 California. Plaza has offices in 15 cities and is licensed to conduct business in 48 states
17 and the District of Columbia. Plaza also is licensed to make reverse mortgages in 44
18 states and is qualified to make FHA, FNMA, HUD, GNMA, USDA, and VA loans.
19 Plaza is subject to the enforcement authority of the Federal Trade Commission (“FTC”).
20 As of January 5, 2012, the Consumer Fina ncial Protection Bureau (“CFPB”) also has
21 supervisory authority over Plaza.
22 In early 2009, the FTC examined data reported under HMDA in 2006 and 2007 to
23 determine whether any wholesale lenders showed substantial rate spread disparities
24 between white and minority borrowers. Based on this initial targeting analysis, the FTC
25 identified Plaza as a lender with high disparities. In 2009, the FTC issued two civil
Y 26 investigative demands to Plaza, requesting loan data for 2006 to 2009 and information N & P 27 regarding the lender’s policies and mortgage business practices. In 2010, the FTC 28 conducted four investigational hearings of Plaza officials and met with Plaza 2 Consent Order Case No.: 13cv2327-H(RBB)
Case 3:13-cv-02327-H-RBB Document 8 Filed 10/01/13 Page 3 of 23
1 representatives on several occasions to discuss the investigation. In 2011, at the FTC’s
2 request, the Department of Justice took over the investigation and obtained loan data for
3 2010.
4 The United States’ Complaint alleges that from 2006 to 2010, Plaza’s policies and
5 practices established a two-step process for the pricing of wholesale loans that it
6 originated. The first step was to establish a base or par rate for a particular type of loan
7 for an applicant with specified credit characteristics. The United States alleges that in
8 this step, Plaza accounted for numerous objective credit-related characteristics of
9 applicants by setting a variety of prices for each of the different loan products that
10 reflected its assessment of individual applicant creditworthiness, as well as the current
11 market rate of interest and the price it could obtain for the sale of such a loan from
12 investors. Plaza communicated these prices through rate sheets that it issued to brokers
13 on a daily basis. The rate sheets spelled out the “par” interest rates based on a
14 borrower’s credit characteristics and the yield spread premiums (“YSPs”) that Plaza
15 paid the broker when the loan application requested an interest rate that exceeded the
16 par rate. The Complaint alleges that Plaza made the credit decision and had the sole and
17 absolute discretion to approve or reject any application submitted by a broker.
18 The Complaint further alleges that Plaza’s second step of pricing wholesale loans
19 permitted mortgage brokers to exercise subjective, unguided discretion in setting the
20 amount of broker fees charged to individual borrowers, unrelated to an applicant’s credit
21 risk characteristics. Mortgage brokers who supplied Plaza with wholesale loans were
22 compensated in two ways: through direct fees paid by the borrower to the broker and/or
23 through YSPs. In setting the terms and conditions for its loans, Plaza accounted for
24 individual borrowers’ differences in credit risk characteristics by setting the prices
25 shown on its rate sheets for each loan product that included its assessment of applicant
Y 26 creditworthiness. The Complaint alleges that mortgage brokers’ deviations from the N & P 27 rate sheet prices were separate from and not controlled by the credit risk adjustments 28 already reflected in the rate sheet prices. The United States alleges that Plaza reviewed 3 Consent Order Case No.: 13cv2327-H(RBB)
Case 3:13-cv-02327-H-RBB Document 8 Filed 10/01/13 Page 4 of 23
1 these total broker fees that brokers charged to borrowers in the loans Plaza funded. The
2 Complaint alleges that Plaza had written policies placing a ceiling on total broker fees
3 that changed several times from 2006 to 2010; however, Plaza did not strictly enforce its
4 shifting fee caps.
5 The United States contends that from 2006 through at least 2010, Plaza through
6 its brokers charged thousands of African-American and Hispanic wholesale borrowers 1 7 higher fees than white borrowers for home mortgage loans, not based on their
8 creditworthiness or other objective criteria related to borrower risk, but because of their
9 race or national origin. The Complaint alleges that these disparities resulted from the
10 implementation and the interaction of Plaza’s policies and practices that: (a) included
11 pricing terms based on the subjective and unguided discretion of brokers in setting total
12 broker fees not based on borrower risk in the terms and conditions of loans Plaza
13 originated after par rates had been established by reference to credit risk characteristics;
14 (b) did not require mortgage brokers to justify or document the reasons for the amount
15 of total broker fees not based on borrower risk; (c) failed to monitor for or remedy the
16 effects of racial and ethnic disparities in those broker fees; (d) permitted mortgage
17 brokers to charge fees in excess of Plaza’s stated caps; and (e) failed to monitor for or
18 remedy the effects of racial and ethnic disparities in those fees that exceeded Plaza’s
19 stated caps. The United States contends that these policies and practices were not
20 justified by business necessity or legitimate business interests. The Complaint alleges
21 that as a result of Plaza’s practices, an African-American or Hispanic borrower paid, on
22 average, hundreds of dollars more for a Plaza loan, in violation of the FHA and ECOA.
23 III. POSITION OF PLAZA
24 Plaza denies all allegations and claims of a pattern or practice of discrimination in
25 violation of the FHA and the ECOA as set forth in the United States’ allegations. Plaza
Y 26 N & P 27 1 For purposes of this Consent Order, and consistent with the Home Mortgage Disclosure Act (“HMDA”), the term “home mortgage loan” or “home loan” refers to loans originated for the purchase 28 or refinance of owner-occupied, one-to-four family dwellings. 4 Consent Order Case No.: 13cv2327-H(RBB)
Case 3:13-cv-02327-H-RBB Document 8 Filed 10/01/13 Page 5 of 23
1 asserts that at all times it conducted its lending in compliance with the letter and spirit of
2 the fair lending laws and in a non-discriminatory manner. Plaza maintains that any of
3 the differences in pricing, as alleged by the United States, were attributable to
4 legitimate, non-discriminatory factors.
5 The United States’ claim focuses on wholesale loans and arises from the fees that
6 independent mortgage brokers charged their customers. Plaza asserts that these fees
7 were negotiated independently between the mortgage brokers and their clients. Plaza
8 believes that competitive market conditions require it to allow independent mortgage
9 brokers to negotiate their compensation directly with their borrower-customers. Plaza
10 contends that it did not receive any compensation from brokers resulting from fees that
11 its independent brokers charged borrowers. To the extent that brokers charged
12 borrowers fees, that compensation went solely to the broker as part of the price
13 negotiated directly between the broker and the borrower. Therefore, Plaza asserts that
14 allowing mortgage brokers to set their own compensation is justifiable by a legitimate
15 business purpose.
16 Furthermore, Plaza notes that it has not been advised by the United States that it
17 alleges that any Plaza employee discriminated intentionally on the basis of race or
18 national origin. Notwithstanding its disagreement with the allegations of the United
19 States, Plaza has agreed to the entry of this order to resolve voluntarily the claims
20 asserted by the United States in order to avoid the costs, risks, and burdens of litigation.
21 Since 2010, Plaza has taken steps designed to lessen any broker compensation
22 disparities based on race or national origin. Plaza has revised its broker compensation
23 policy to comply with the April 2011 am endments to Regulation Z. Plaza has
24 developed a nationwide lending program intended to accommodate traditionally
25 underserved communities and provide financial literacy training, home ownership
Y 26 instruction, and access to more affordable credit in the acquisition of housing. Plaza has N & P 27 also initiated a company-wide fair lending training program that is a part of its ongoing 28 5 Consent Order Case No.: 13cv2327-H(RBB)
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1 compliance program as well as its new-hire orientation syllabus.2
2 IV. REMEDIAL ORDER
3 A. General Prohibitory Injunction
4 1. Plaza, including all of its officers, employees, agents, representatives,
5 assignees, and all those in active concert or participation with any of them, is hereby
6 enjoined from engaging in any act or practice that discriminates on the basis of race or
7 national origin in any aspect of a residential real estate-related transaction in violation of
8 the FHA, or in any aspect of a credit transaction in violation of ECOA. This prohibition
9 includes, but is not limited to: the adoption, performance, or implementation of any
10 policy, practice, or act that results in race or national origin discrimination against
11 residential mortgagors in the assessment of mortgage broker fees.
12 2. This Order requires the lender to take actions to remedy its alleged
13 discrimination. Plaza retains the discretion to take any additional actions that it believes
14 are appropriate to achieve the goals of this Order. The effective date of this Order will
15 be the date on which it is approved and entered by the Court.
16 B. Pricing Policies and Procedures
17 3. Plaza will have in place as part of a loan pricing policy, specific, race- and
18 national origin-neutral standards for the assessment of broker fees on residential real-
19 estate related loans that Plaza underwrites, originates, or funds that are designed to
20 avoid unlawful discrimination by the lender. The loan pricing policy will also require
21 that written documentation of such fees be maintained in each loan file and be among
22 the application documents submitted to Plaza. These requirements will be made part of
23 any broker agreement between a wholesale mortgage broker and Plaza.
24 4. Plaza’s loan pricing policies will require the lender to post and prominently
25 display in each location where applications for Plaza’s loans are received a notice of
Y 26 N & 2 P In addition, since 2010, Plaza has hired a nationally recognized civil rights law firm to help 27 implement and manage Plaza’s compliance program, and retained the services of a national non-profit fair housing organization to both review Plaza’s policies and recommend initiatives designed to 28 prevent discrimination. 6 Consent Order Case No.: 13cv2327-H(RBB)
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1 non-discrimination (a sample of which is attached as Exhibit A).
2 5. Plaza’s policy will require brokers to make the following disclosures to
3 applicants, to the extent not inconsistent with applicable law: (a) the full amount of any
4 broker compensation and that such compensation may or may not be negotiable
5 between the broker and borrower, and (b) a notice of non-discrimination that provides
6 substantially the same information as is contained in Appendix A. Such disclosures will
7 be in writing, signed by the broker and the borrower (if the borrower executes), and
8 submitted by the broker to be made part of the loan file by Plaza. This disclosure will
9 be made as early as practicable but not later than 48 hours prior to the closing of the
10 loan.
11 6. Plaza’s loan pricing policies will require all wholesale mortgage brokers
12 from whom they accept wholesale residential mortgage applications to comply with the
13 requirements established in Paragraphs 3-5. Plaza’s policies will also require
14 designated employees, subject to the approval of the United States and under the
15 supervision of a designated manager of Plaza, to review applications received from
16 wholesale mortgage brokers for compliance with loan pricing policies. Any loan that is
17 not in compliance with the pricing policy may not be funded. All reviews will be
18 documented and kept in the loan file.
19 7. During the term of this Order, Plaza may change its loan pricing policies as
20 set forth in Paragraphs 3-6 upon written advance notice to the United States, which will
21 have thirty (30) days from receipt of such notice to raise any objection to the proposed
22 change(s). If it raises any objection, the parties will confer to resolve their differences.
23 If they are unable to do so, either party may bring the dispute to this Court for
24 resolution. Plaza will not implement the change(s) during such a dispute.
25 C. Monitoring Program
Y 26 8. Within ninety (90) days of the Effective Date of this Order, Plaza will have N & P 27 in place a monitoring program designed to ensure compliance with this Order. The 28 program will monitor the lender’s loans for potential disparities based on race and 7 Consent Order Case No.: 13cv2327-H(RBB)
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1 national origin. At a minimum, Plaza will monitor the compensation received by its
2 wholesale mortgage brokers. The program also will require a semi-annual review by
3 senior managers. Each semi-annual review will include, but not be limited to, an
4 analysis designed to detect statistically significant broker fee disparities based on race
5 and national origin with respect to the lender’s loan products covered by this Order.
6 The analysis will be conducted on an aggregate basis for all of Plaza’s wholesale
7 mortgage brokers and on a broker-by-broker basis in selected geographic areas, to be
8 agreed upon by the parties in advance of each semi-annual analysis.
9 a. In the event that any such revi ew discloses statistically significant
10 broker fee disparities between African-American or Hispanic and white borrowers,
11 Plaza will attempt to determine the reason(s) for those disparities and will promptly take
12 corrective action to address disparities that are attributable to a policy or practice of
13 Plaza and not justified by a legitimate business need. In determining whether to take
14 corrective action and what action to take, a variety of different factors and analyses may
15 be considered, with the review and approval of the United States, including analyses
16 done at an aggregate, metropolitan statistical area, or broker level. Such analyses will
17 be utilized as deemed appropriate on a case-by-case basis. Nothing in this Decree will
18 mandate the use of any one type of analysis as dispositive of the corrective action to be
19 taken in all situations. Corrective action may include, as warranted, financial
20 remediation for borrowers, further modifications to Plaza’s pricing policies and/or
21 monitoring programs as appropriate, education, discipline, or termination of broker
22 relationships, or any other action as deemed appropriate under the circumstances. Plaza
23 will document all such disparities, determinations, and actions taken and will provide a
24 summary of the semi-annual reviews and any documentation and analysis relating
25 thereto to the United States on a semi-annual basis.
Y 26 b. In the event that any such review discloses statistically significant N & P 27 disparities with respect to any particular broker’s compensation practices, Plaza will 28 require the broker to explain the non-discriminatory reason(s) for those disparities. If 8 Consent Order Case No.: 13cv2327-H(RBB)
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1 there is no reasonable, non-race or national origin-based explanation for the noted
2 disparities, Plaza will require the broker to take prompt corrective action to address the
3 disparities.
4 9. If the United States raises any objections to Plaza’s determinations or
5 remedial actions, the parties will meet and confer to consider appropriate steps to
6 address the concerns raised by the United States’ review. If the parties are unable to
7 come to an agreement regarding such objections, any party may bring the dispute to this
8 Court for resolution.
9 D. Notification to the United States and Right to Object
10 10. Plaza will provide a copy of the policies it utilizes to implement Paragraphs
11 3-6 of this Order and descriptions of the monitoring programs required under
12 Paragraphs 8-9 to the United States within ninety (90) days of the Effective Date of this
13 Order. The United States will have thirty (30) days from receipt of the policies and
14 descriptions to raise any objections to them, and if it raises any, the parties will confer to
15 resolve their differences. In the event the parties are unable to do so, either party may
16 bring the dispute to this Court for resolution.
17 E. Equal Credit Opportunity Training Program
18 11. Plaza currently provides comprehensive fair lending training to
19 management officials and employees. Within ninety (90) days of the Effective Date of
20 the Order, Plaza will provide access to a copy of this Order and the policies referenced
21 therein to its management officials and employees who participate in taking applications
22 for, originating, or pricing loans secured by residential real estate, including employees
23 who have significant contact with or oversight of mortgage brokers, and employees
24 responsible for conducting compliance monitoring as provided in Paragraph 9 of this
25 Order.
Y 26 12. Within 180 days of the Effective Date of the Order, and annually thereafter N & P 27 for the duration of the Order, Plaza will continue to provide equal credit opportunity 28 training to the management officials and employees specified in Paragraph 11. Plaza 9 Consent Order Case No.: 13cv2327-H(RBB)
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1 will provide equal credit opportunity training to each new management official or
2 employee whose responsibilities include those set forth in the preceding sentence within
3 ninety (90) days of beginning his or her employment in that position.
4 13. During the equal credit opportunity training, Plaza will provide to each
5 participant training on the terms of this Order, the policies referenced therein, the
6 requirements of the FHA, the ECOA, and his or her responsibilities under each. Should
7 the content of the training program required by this Paragraph change, such changes
8 will be submitted to the United States for approval in advance of implementation. Any
9 expenses associated with this training program will be borne by Plaza.
10 14. Plaza will secure from each official and employee specified in Paragraph
11 11 a signed statement acknowledging that he or she has received access to a copy of this
12 Order and the loan policies and has completed the initial equal credit opportunity
13 training. The signature of the acknowledgement may be either manual or electronic.
14 These statements will be substantially in the form of Appendix B (Acknowledgment)
15 and Appendix C (Equal Credit Opportunity Training). During the term of this Order,
16 each new employee or agent with substantive responsibility relating to the lender’s loan
17 programs covered by this Order will be provided access to a copy of this Order and
18 given an opportunity to have any questions answered, and will sign the acknowledgment
19 form statement (Appendix B) within ten (10) days of beginning his or her employment
20 in that position.
21 F. Community Enrichment Program
22 15. Plaza currently operates a Community Enrichment Program that is
23 designed to address the lack of affordable housing and lending products in minority and
24 underserved communities in selected geographic areas nationwide. Plaza will continue
25 to operate the Community En richment Program for the entire duration of the Order.
Y 26 16. Through the program, Plaza offers the Fannie Mae Community Home N & P 27 Buyers Affordable Lending product as well as standard FHA, VA and USDA lending 28 products to meet the financing needs of qualified applicants in communities that may 10 Consent Order Case No.: 13cv2327-H(RBB)
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1 not otherwise have access to prime mortgage lending programs and interest rates. The
2 program provides qualified residents in designated minority and underserved areas loan
3 products with interest rates, terms, and/or other subsidies that are more advantageous to
4 the applicant than Plaza’s normal products. Under this program, Plaza offers one or
5 more of the following: an interest rate below that which Plaza would normally charge,
6 down payment or closing cost grants or assistance, or other financial aid.
7 17. Within thirty (30) days of entry of this Order, the parties will confer on the
8 precise financial benefits Plaza will provide to qualified borrowers under the program
9 for the duration of the Order. The parties will also confer on the specific geographic
10 areas where the program will continue to operate and any other relevant program
11 requirements, including the targeted marketing that Plaza will provide in each
12 designated area. In the event that the parties are unable to agree upon the terms of the
13 program, either party may bring the dispute to this Court for resolution.
14 18. For the duration of this Order, Plaza will retain the discretion to offer
15 multiple forms of financial assistance to qualified applicants on an individual basis as it
16 deems appropriate under the factual circumstances of a particular application so long as
17 the maximum total financial assistance provided by Plaza on a covered transaction does
18 not exceed $15,000. Plaza will apply the available funds in a manner that maximizes
19 the likelihood that it will originate a loan to a qualified applicant, consistent with
20 applicable underwriting guidelines, invest or guidelines, and safety and soundness
21 standards. Plaza also will have discretion to provide the loan subsidy among its single-
22 family residential loan products.
23 19. Plaza may expend additional funds in connection with the program,
24 including funds related to homebuyer education, counseling, and sponsorship of trade
25 events and conferences. Any homebuyer education or counseling associated with the
Y 26 program must be conducted by a HUD-approved counseling agency. Plaza may define N & P 27 additional procedures and requirements for homebuyer education and counseling, 28 subject to approval by the United States. 11 Consent Order Case No.: 13cv2327-H(RBB)
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1 20. No provision of this Order, including the Community Enrichment Program,
2 requires Plaza to make any unsafe or unsound loan or to make a loan to a person who is
3 not qualified for the loan based on lawful, nondiscriminatory terms. Nor does any
4 provision of this Order require Plaza to alter its standards for underwriting mortgage
5 loans. The bank’s underwriting standards applied to applicants that qualify for the
6 Community Enrichment Program will be no less favorable than the standards that are
7 applied to all other applicants. At the same time, no provision of this Order imposes an
8 obligation on Plaza to apply underwriting standards to applicants that qualify for the
9 program that are more favorable than the standards otherwise applied by the lender. No
10 provision of this Order will require Plaza to offer a benefit to a borrower, or a form of
11 financial assistance, that violates any law, regulation, rule, or standard imposed by any
12 federal agency, including the Department of Housing and Urban Development (HUD).
13 21. During the term of this Order, Plaza will provide semi-annual progress
14 reports to the United States summarizing its actions taken during the previous six
15 months to implement the Community Enrichment Program, including the number of
16 loans originated under the program, the amount of subsidies provided, and a description
17 of any marketing, consumer education, or outreach related to the program.
18 22. During the term of this Order, Plaza will assess the effectiveness of the
19 Community Enrichment Program in achieving its goals and will recommend to the
20 United States any changes it reasonably believes are necessary and appropriate to
21 increase the program’s effectiveness.
22 23. The United States has the sole discretion to determine whether Plaza is in
23 material compliance with Paragraphs 15-22 of this Order. If at any time during the term
24 of this Order the United States has reason to believe that Plaza is not materially
25 complying with these paragraphs, it will notify Plaza and the parties will meet and
Y 26 confer for the purpose of mutually agreeing upon a course of action to effect Plaza’s N & P 27 compliance with the Community Enrichment Program. In the event that the United 28 States and Plaza are unable to agree upon a course of action to effect Plaza’s material 12 Consent Order Case No.: 13cv2327-H(RBB)
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1 compliance, the United States has the discretion to present the matter to the court or to
2 rescind this Consent Order and seek supplemental relief or reinstate its Complaint. In
3 the event that the United States opts to rescind this Consent Order under the terms of
4 this paragraph, Plaza expressly agrees not to count time during which this Consent
5 Order is in place, or use the terms or existence of this Consent Order, to plead, argue, or
6 otherwise raise any defenses under theories of claim preclusion, issue preclusion, statute
7 of limitations, estoppel, laches, or similar theories. If the United States determines that
8 Plaza has materially complied with Paragraphs 15-22 of this Order, it will provide a
9 certification to Plaza no later than sixty (60) days after Plaza’s submission of its third
10 annual report pursuant to Paragraph 39.
11 V. SATISFACTION OF UNITED STATES’ CLAIMS FOR
12 MONETARY RELIEF
13 24. Plaza will deposit in an interest-bearing escrow account the total sum of $3
14 million to compensate for monetary damages that aggrieved persons may have suffered
15 as a result of the alleged violations of the FHA and ECOA with respect to residential
16 mortgage loans (the “Settlement Fund”). Title to this account will be in the name of
17 “Plaza Home Mortgage, Inc. for the benefit of aggrieved persons pursuant to Order of
18 the Court in Civil Action No. 3:13-cv-02327-H (RBB)”. Plaza will provide written
19 verification of the deposit to the United States within fifteen (15) days of the Effective
20 Date of this Order. Any interest that accrues will become part of the Settlement Fund
21 and be utilized and disposed of as set forth herein.
22 25. Within thirty (30) days of the Effective Date of this Order, Plaza will
23 identify a proposed Settlement Administrator (“Administrator”). Within thirty (30) days
24 of obtaining the United States’ consent to the selected Administrator, Plaza will execute
25 a contract with the Administ rator to conduct the activities set forth in the following
Y 26 paragraphs. Plaza will obtain the United States’ consent to the contract prior to its N & P 27 execution. Plaza will bear all reasonable costs and expenses of the Administrator. The 28 Administrator’s contract will require it to work cooperatively with the United States in 13 Consent Order Case No.: 13cv2327-H(RBB)
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1 the conduct of its activities, including reporting regularly and providing all reasonably
2 requested information to the United States. Plaza will allow the Administrator access to
3 relevant mortgage loan files and borrower contact information for the purposes of
4 accomplishing its duties under the Order. The contract will require the Administrator to
5 comply with all confidentiality and privacy restrictions applicable to the party who
6 supplies the information and data to the Administrator.
7 26. In the event the United States has reason to believe that the Administrator
8 is not materially complying with the terms of its contract with Plaza, the United States
9 and Plaza will meet and confer for the purpose of mutually agreeing upon a course of
10 action to effect the Administrator’s material compliance with its contract. In the event
11 that the United States and Plaza are unable to agree upon a course of action to effect the
12 Administrator’s material compliance with its contract, the parties may present the matter
13 to the court.
14 27. Within thirty (30) days of the Effective Date of this Order, the United
15 States will request any information it believes will assist in identifying aggrieved
16 persons and determining any damages. Plaza will, within thirty (30) days of receipt of
17 such request, supply, to the extent that it is within the lender’s control, such information
18 as requested. Requested data may be supplied as a supplement to the database already
19 provided to the United States by the lender in the course of the United States’ inquiry.
20 To the extent that the information is not within Plaza’s control, the lender will, within
21 thirty (30) days of receipt of such request, supply any data in its control that identifies
22 other parties that may have that the information.
23 28. The United States will, upon reasona ble notice, be allowed access to the
24 lender’s records and files to verify the accuracy of the data provided and to otherwise
25 identify persons entitled to the payments from the Settlement Fund.
Y 26 29. Within ninety (90) days of the Effective Date of this Order, the United N & P 27 States will provide to the Administrator a list of aggrieved persons and an initial 28 estimate of the amount each borrower will receive from the Settlement Fund. The 14 Consent Order Case No.: 13cv2327-H(RBB)
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1 United States will base these initial estimates on the loan fees and costs of the individual
2 loans. Pursuant to its contract, the Administrator will make its best efforts, using all
3 reasonable methods regularly used by companies that administer litigation and
4 government enforcement settlement funds, to locate each identified aggrieved person
5 and obtain such information as the United States reasonably considers necessary from
6 each. The Administrator’s contract will require the Administrator to complete this
7 responsibility within a period of four (4) months from the date the United States
8 provided the list, subject to an extension of time as provided by Paragraph 40. The
9 Administrator’s contract will require it to establish cost-free means for the allegedly
10 aggrieved persons to contact it, such as email and a toll-free telephone number, and will
11 require it to provide all written materials to aggrieved persons in both English and
12 Spanish.
13 30. The United States will specify the final amount each aggrieved person
14 located by the Administrator will receive from the initial amount deposited into the
15 Settlement Fund no later than sixty (60) days after the Administrator’s deadline for
16 locating aggrieved persons has passed. The United States will provide the
17 compensation list to the Administrator. No individual may request a review by the
18 Court or the Administrator of the final payment amounts. The parties agree that the
19 total amount of the Settlement Fund will not be altered based on the number of allegedly
20 aggrieved persons who confirm their identity and willingness to release individual
21 discrimination claims pursuant to Paragraph 31.
22 31. The Administrator will send releases, as set forth in Appendix D
23 (“Release”), to each aggrieved person prior to their receipt of their payment. After
24 receipt of executed Releases, the Administrator will promptly deliver payments to those
25 persons in the amounts determined by the United States as described in Paragraph 30.
Y 26 The Administrator’s identification and payment responsibility may be implemented on a N & P 27 rolling basis with approval from the United States. 28 32. The Administrator’s contract will require the Administrator to set forth 15 Consent Order Case No.: 13cv2327-H(RBB)
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1 reasonable deadlines, subject to approval of the United States, so that compensation is
2 distributed and checks are presented for payment or become void prior to the date that is
3 twenty-four (24) months from the date the Administrator begins to locate aggrieved
4 persons pursuant to Paragraph 29.
5 33. Payments from the Settlement Fund to allegedly aggrieved persons will be
6 subject to the following conditions:
7 (a) No aggrieved person will be paid any amount from the Settlement
8 Fund until he or she has executed and delivered to the Administrator a written release of
9 all claims, legal or equitable, that he or she might have against the released persons and
10 entities regarding the claims asserted by the United States in this lawsuit, so long as
11 such claims accrued prior to the entry of this Order; and
12 (b) The total amount paid by Plaza collectively to the aggrieved persons
13 will not exceed the amount of the Settlement Fund, including accrued interest.
14 34. Any moneys not distributed from the Settlement Fund, including accrued
15 interest, within two (2) years of the date the initial notifications are sent to persons
16 deemed to be aggrieved by the United States will be distributed to qualified
17 organization(s) that provide services including credit and housing counseling (including
18 assistance in obtaining loan modification and preventing foreclosure), legal
19 representation of borrowers seeking to obtain a loan modification or to prevent
20 foreclosure, financial literacy, and other related educational programs targeted at
21 African-American and Hispanic potential and former borrowers in communities where
22 the Complaint alleges significant discrimination occurred against African-American and
23 Hispanic borrowers. Recipient(s) of such funds must not be related to Plaza or any
24 entity owned by Plaza. Before selecting the qualified organization(s), Plaza will obtain
25 a proposal from the organization(s) on how the funds will be used consistent with the
Y 26 above-stated purpose, submit such proposal to the United States, and consult with and N & P 27 obtain the non-objection of the United States. The United States and Plaza may request 28 modification of the proposal before approving the organization(s). The parties will 16 Consent Order Case No.: 13cv2327-H(RBB)
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1 thereafter seek approval from the Court to distribute the remaining funds to the qualified
2 organization(s). Plaza will require each recipient to submit to Plaza and the United
3 States a detailed report on how funds are utilized within one (1) year after the funds are
4 distributed, and every year thereafter until the funds are exhausted.
5 35. Plaza will not be entitled to a set-off, or any other reduction, of the amount
6 of payments to aggrieved persons because of any debts owed by the identified persons.
7 Plaza also will not refuse to make a payment based on a release of legal claims or loan
8 modification previously signed by any such aggrieved persons.
9 36. During the period of this Order, Plaza will maintain a complaint resolution
10 program to address consumer complaints alleging discrimination regarding loans
11 originated by Plaza. Documentation regarding this complaint resolution program,
12 including documentation of individual complaints and resolutions, if any, will be made
13 available to the United States on a semi-annual basis and included in the reports
14 referenced in Paragraph 38. A person will not be deemed ineligible for the complaint
15 resolution program on the basis of having executed the release described in Paragraph
16 33(a), but there is no requirement under this Order that any complaint necessarily be
17 resolved for or against the lender.
18 VI. EVALUATING AND MONITORING COMPLIANCE
19 37. For the duration of this Order, Plaza will retain all records relating to its
20 obligations hereunder as well as its complian ce activities as set forth herein. The United
21 States will have the right to review and copy such records upon request.
22 38. In addition to the reporting requirements set forth in Paragraphs 8(a), 21,
23 and 36, Plaza will submit a report to the United States within six months of the effective
24 date of this Order regarding its progress in establishing and implementing each of the
25 remedial items specified in this Order. A second report will be filed on the first
Y 26 anniversary of this Order. Thereafter, Plaza will submit a report annually for the term of N & P 27 the Order describing the actions taken in compliance with the provisions of the Order. 28 The report will include an objective assessment of the extent to which each quantifiable 17 Consent Order Case No.: 13cv2327-H(RBB)
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1 obligation was met, an explanation of why any particular component fell short of
2 meeting the goal for that year, and any recommendations for additional actions to
3 achieve the goals of this Order. If applicable, Plaza will attach to the annual reports
4 representative copies of training material and disseminated pursuant to this Order.
5 VII. ADMINISTRATION
6 39. The Order will terminate after the submission of Plaza’s third annual report
7 to the United States, provided that Plaza has materially complied with Paragraphs 15-22
8 of this Order, as set forth in Paragraph 23. If the United States determines that Plaza has
9 not materially complied with Paragraphs 15-22, the United States must present good
10 cause to the Court for extending the term of this Order or rescinding this Order and
11 reinstating its complaint ninety (90) days before Plaza submits its third annual report
12 pursuant to Paragraph 38.
13 40. Any time limits for performance fixed by this Order may be extended by
14 mutual written agreement of the parties. Additionally, details related to administration
15 of the Settlement Fund as set forth in Paragraphs 25-32 can be modified by agreement
16 of the parties and without further Court approval. Other modifications to this Order
17 may be made only upon approval of the Court, by motion by either party. The parties
18 recognize that there may be changes in relevant and material factual circumstances
19 during the term of this Order that may impact the accomplishment of its goals. The
20 parties agree to work cooperatively to disc uss and attempt to agree upon any proposed
21 modifications to this Order resulting therefrom.
22 41. In the event that any disputes arise about the interpretation of or
23 compliance with the terms of this Order, the parties will endeavor in good faith to
24 resolve any such dispute between themselves before bringing it to this Court for
25 resolution. The parties agree that if it either reasonably believes that the other party
Y 26 failed to comply with any obligation under this Order, it will provide written notice N & P 27 thereof and allow a period of at least thirty (30) days to discuss a voluntarily resolution 28 of the alleged violation before presenting the matter to this Court. In the event of either 18 Consent Order Case No.: 13cv2327-H(RBB)
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1 a failure by Plaza to perform in a timely manner any act required by this Order or an act
2 by Plaza, in violation of any provision hereof, the United States may move this Court to
3 impose any remedy authorized by law or equity, including attorneys’ fees and costs.
4 42. Nothing in this Order will excuse the lender’s compliance with any
5 currently or subsequently effective provision of law or order of a regulator with
6 authority over Plaza that imposes additional obligations on the lender.
7 43. The parties agree that, as of the date of the entry of this Order, litigation is
8 not “reasonably foreseeable” concerning the matters described above. To the extent that
9 either party previously implemented a litigation hold to preserve documents,
10 electronically stored information (ESI), or things related to the matters described above,
11 the party is no longer required to maintain such litigation hold. Nothing in this
12 paragraph relieves either party of any other obligations imposed by this Order.
13 44. Subject to the conditions of Paragraphs 23 and 39, Plaza’s compliance with
14 the terms of this Order will fully and finally resolve all claims of the United States
15 relating to the alleged violation of the fair lending laws by means of discriminating on
16 the basis of race and national origin, as alleged in the Complaint in this action, including
17 all claims for equitable relief and monetary damages and penalties. Each party to this
18 Consent Order will bear its own costs and attorney’s fees associated with this litigation.
19 45. The Court will retain jurisdiction for the duration of this Consent Order to
20 enforce the terms of the Order, after which time the case will be dismissed with
21 prejudice.
22 IT IS SO ORDERED
23 DATED: October 1, 2013
24 ______
25 MARILYN L. HUFF, DISTRICT JUDGE UNITED STATES DISTRICT COURT Y 26 N & P 27
28 19 Consent Order Case No.: 13cv2327-H(RBB)
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1 APPENDIX A
2 We do Business in Accordance with 3 Federal Fair Lending Laws 4
5 UNDER THE EQUAL CREDIT OPPORTUNITY
6 ACT, IT IS ILLEGAL TO DISCRIMINATE IN ANY
7 CREDIT TRANSACTION:
8 On the basis of race, color, national origin, religion, 9 sex, marital status, or age; 10
11 Because income is from public assistance; or
12
13 Because a right has been exercised under the Federal Consumer Credit Protection Laws. 14
15 IF YOU BELIEVE YOU HAVE BEEN 16 DISCRIMINATED AGAINST, YOU SHOULD SEND
17 A COMPLAINT TO ONE OF THE FOLLOWING:
18
19 U.S. Department of Justice Consumer Financial Protection Bureau Civil Rights Division P.O. Box 4503
20 Housing and Civil Enforcement Iowa City, Iowa 52244 Section (855) 411-CFPB (2372) 21 Washington, DC 20530 (855) 729-CFPB (2372) (TTY/TDD) 1-800-896-7743 www.consumerfinance.gov 22 http://www.usdoj.gov/crt/housing
23 Federal Trade Commission 24 Washington, DC 20580
25 (202) 326-2222 https://www.ftccomplaintassistant.gov/ Y 26 N & P 27 28 20 Consent Order Case No.: 13cv2327-H(RBB)
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1 APPENDIX B
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3 Officer and Employee Acknowledgement
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5 I acknowledge that on ______, I was provided copies of the Consent
6 Order entered by the Court in United States v. Plaza Home Mortgage, Inc. (S.D. Cal.),
7 and the loan policies developed pursuant thereto. I have read and understand these
8 documents and have had my questions about these documents answered. I believe I
9 understand my legal responsibilities and will comply with those responsibilities.
10 ______11 Signature 12 ______13 Print Name 14 ______15 Job Title 16 ______17 Date 18
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Y 26 N & P 27 28 21 Consent Order Case No.: 13cv2327-H(RBB)
Case 3:13-cv-02327-H-RBB Document 8 Filed 10/01/13 Page 22 of 23
1 APPENDIX C
2
3 Officer and Employee Training Certification
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5 I certify that on ______, I received training with respect to my
6 responsibilities under the Consent Order entered by the Court in United States v. Plaza
7 Home Mortgage, Inc. (S.D. Cal.), and the federal fair lending laws. I have had the
8 opportunity to have my questions about them answered. I believe I understand my legal
9 responsibilities not to discriminate under the federal fair lending laws, including the Fair
10 Housing Act and Equal Credit Opportunity Act, and will comply with those
11 responsibilities.
12 ______Signature 13
14 ______Print Name 15
16 ______Job Title 17
18 ______Date 19
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Y 26 N & P 27 28 22 Consent Order Case No.: 13cv2327-H(RBB)
Case 3:13-cv-02327-H-RBB Document 8 Filed 10/01/13 Page 23 of 23
1 APPENDIX D
2 Release 3
4
5 In consideration for the parties’ agreement to the terms of the Consent Order
6 entered in United States v. Plaza Home Mortgage, Inc. (S.D. Cal.), and the payment to
7 me of $______, pursuant to the Consent Order and effective upon that payment, I
8 hereby release and forever discharge all claims, rights, remedies, and recoveries related
9 to the facts of credit discrimination in the origination of residential mortgage loans at
10 issue in the litigation referenced above, and release and forever discharge all claims,
11 rights, remedies, and recoveries arising from credit discrimination alleged in that
12 litigation in connection with the origination of my loan(s), known and unknown, up to
13 and including the date of execution of this release.
14 I understand that this releases those claims, rights, remedies and recoveries
15 against Plaza Home Mortgage, Inc., and against any and all related entities, parents,
16 predecessors, successors, subsidiaries, and affiliates, and against any and all of their past
17 and present directors, officers, agents, managers, supervisors, shareholders, and
18 employees and their heirs, executors, administrators, successors in interest, or assigns.
19
20 Executed this ___ day of ______, ____.
21 ______22 Signature 23 ______24 Print Name 25 ______Y 26 N Address & P 27
28 23 Consent Order Case No.: 13cv2327-H(RBB)