Flagstar to Pay $1.2M for Discrimination
By DEANNA WRENN Associated Press Writer
INDIANAPOLIS (AP - Dec. 23, 2003) - Flagstar Bank will pay $1.2 million in a class-action settlement, after a judge ruled the lender charged white customers higher fees than minorities.
Flagstar, a mortgage company based in Troy, Mich., charged minority customers up to 3 percent in loan officer commission fees while charging whites a maximum of 4 percent.
"I've never seen anything like it," said Amy Ficklin DeBrota, an Indianapolis attorney who sued Flagstar on behalf of 970 consumers who claimed they were overcharged.
Flagstar spokeswoman Susan Cherry said the company does not comment on lawsuits.
U.S. District Court Magistrate Judge Tim Baker signed the settlement agreement in Indianapolis Monday.
Flagstar has agreed to reimburse lawsuit participants the amount they were overcharged, ranging from $63 to more than $2,000 each and totaling $704,000 plus interest. The company also will pay each person $193 in non-economic damages, about $160,000 total.
In addition, the company will pay $300,000 in legal fees.
Most of the lawsuit participants live in Indiana and Michigan, and should get checks from Flagstar by the end of the year, DeBrota said Tuesday.
U.S. District Court Judge John Tinder ruled in August that Flagstar's policy discriminated against non-minorities. The decision allowed the class-action case to continue.
Flagstar implemented the policy in May of 2001 and discontinued it in January 2002, according to court documents.
DeBrota said the bank started the policy because internal investigators thought minorities might have been charged more than whites, and the bank wanted to ensure that wasn't the case.
DeBrota said the bank used U.S. Housing and Urban Development forms intended for statistical purposes only to determine a loan applicant's race.
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On the Net: Flagstar Bank www.flagstar.com 2003-12-23 22:23:11 GMT