The Consumer Financial Protection Bureau (CFPB) has taken decisive action against Draper & Kramer Mortgage Corporation for what it describes as discriminatory mortgage lending practices that allegedly excluded potential homeowners in majority-Black and Hispanic neighborhoods. According to a press release on the CFPB's official website, the lender is accused of purposefully avoiding business in racially diverse areas, particularly in the Chicago and Boston metro areas.
The government watchdog claims that from 2019 through 2021, Draper & Kramer located all its offices in predominantly white neighborhoods, concentrated its marketing there, and barely touched base with communities of color. The lack of offices and marketing efforts in these areas, coupled with a discouraging business model, meant fewer applications and originations of loans from Black and Hispanic prospective homeowners. "Draper illegally excluded homeowners and engaged in redlining across the Chicago and Boston metro areas," said CFPB Director Rohit Chopra, detailing the allegations that landed the mortgage lender in hot water with the bureau, as reported by the CFPB.
If the court approves the proposed order, Draper & Kramer will face a ban from engaging in residential mortgage lending for five years and will be ordered to pay a $1.5 million penalty into the CFPB’s victim's relief fund. This course of action falls under the authority of the Consumer Financial Protection Act, through which the CFPB can hold institutions accountable for violating consumer financial laws, including the Equal Credit Opportunity Act.
The allegations against Draper depict, a stark image of modern-day redlining. A practice that has historically denied African Americans and other people of color fair access to housing and the necessary wealth accumulation that often comes with homeownership. These actions come as a part of a larger effort to curb discriminatory lending practices that have long-term negative effects on the economic health and stability of minority communities. Consumers who have experienced unfair financial practices are encouraged to file a complaint through the CFPB's website or by phone.
In a move reflective of the severity of Draper's alleged violations, aside from the suspension of mortgage activities, the company is expected to contribute significantly towards remediation. Employees with knowledge of federal consumer financial law violations are encouraged to report their company by contacting the CFPB directly. With this action, the bureau continues its mission to ensure the consumer financial market is fair, transparent, and competitive, living up to its standing as an integral arm of federal financial oversight.
