On March 26, the CFPB, in its first press release in over 50 days, announced its intention to seek to vacate a redlining settlement previously imposed on a nonbank retail-mortgage creditor and broker based in Chicago. As previously covered by InfoBytes, the Bureau filed a proposed stipulated final judgment against the mortgage lender to prohibit it from allegedly violating the ECOA in November 2024. Following an investigation, the CFPB now seeks to return the $105,000 civil money penalty paid by the firm, which employed around ten people and operated a radio program. According to the CFPB, the initial investigation was found by performing a “redlining screen” based on an “arbitrary number of mortgages,” and lacked evidence of wrongdoing, relying instead on “perceived racial disparities in mortgage application and origination statistics.” The press release also asserted the investigation was not based on any consumer complaints, and alleged the Bureau’s investigations were based in part on protected speech from the company’s radio show, which criticized the Bureau at times.

As previously covered in this Orrick Insight, the CFPB’s initial complaint alleged the company owner and employees made numerous racially disparaging comments on the radio broadcast, and alleged there were statistically significant disparities in the company’s applications drawn from majority Black neighborhoods in the Chicago area, as compared to its peers, to form the basis for its redlining claim.

Visit our resource center, CFPB Pause: Where From Here?, to stay on top of the latest and what it may mean for the federal and state regulatory and enforcement landscape.