Filed Date: Sept. 29, 2022
Case Ongoing
Clearinghouse coding complete
On September 29, 2022, the United States filed a complaint against Evolve Bank and Trust in the U.S. District Court for the Western District of Tennessee under the Fair Housing Act and the Equal Credit Opportunity Act. Judge Sheryl H. Lipman and Chief Magistrate Judge Tu M. Pham heard this case.
The United States claimed that, from 2014 to 2019, Evolve Bank discriminated against women, Black, and Hispanic borrowers via its “discretionary pricing” components of home loan borrowing. “Discretionary pricing” referred to the bank’s ability to determine what initial interest rate, fees, charges, discounts, or other pricing was appropriate to add or subtract from the risk-based price of the loan. Thus, the loan officers could assign higher interest rates to individuals regardless of their creditworthiness or the characteristics of the loan. On the flip side, officers could offer discounts to particular borrowers that fit within their Loan Production Offices (where the loans are managed, assigned, written, etc.) margin. According to the United States, none of these "discretionary pricing" decisions were based on the borrowers’ creditworthiness or loan characteristics.
Evolve Bank had been on notice since 2014 from the Department of Justice on its investigation into these policies. In 2020, the bank started a fair lending program and hired a fair lending officer. Also in 2020, they started documenting the discounts offered to borrowers.
Compared to their white counterparts, Black borrowers had to pay about $360 more per person in discretionary pricing on their mortgages. Women had to pay about $286 more per person than male borrowers on their mortgages. Hispanic borrowers had to pay the most compared to white borrowers; they had to pay about $420 more per person in discretionary pricing.
The United States sought declarative relief, injunctive relief to stop the discrimination, injunctive relief to take affirmative steps to prevent discriminatory conduct like this in the future, compensatory damages to restore the victims of this unfair discretionary pricing to the position they would have been had there not been discriminatory practices, and punitive damages.
On October 17, 2022, both parties signed and submitted a consent order. In the consent order, the bank denied all allegations of wrongdoing. For injunctive relief, the parties agreed to enjoin Evolve Bank from practicing discriminating policies. The bank had to had to implement a Fair Lending Committee and Officer, a revised Mortgage Division Loan Pricing Policy (as approved and worked out between the parties), a recordkeeping and monitoring program, continuation of a non-discrimination notice to clients, and an equal credit opportunity training program. For monetary relief, the parties agreed that Evolve Bank would pay $1,300,000 a settlement fund for the borrowers who might have been affected by the alleged discriminative policy, where the United States would provide a list to Evolve Bank of the individuals who were eligible to the settlement relief. Evolve Bank would also pay a penalty fine of $50,000 to the United States Treasury. In addition, the parties also agreed to appoint and retain a "Settlement Advisor" to oversee the settlement funds. Evolve Bank also had to retain documents, annually report to the United States, and maintain a complaint resolution program for consumer complaints, all during the duration of the consent order. The consent order was set to last about four and a half years (90 days after the fourth annual report that was required to be sent to the United States).
Judge Sheryl H. Lipman signed this consent order on October 17, 2022— the same day the parties signed and submitted it. This case is ongoing for monitoring of the consent decree.
Summary Authors
Isabel Hershey (10/30/2022)
See docket on RECAP: https://www.courtlistener.com/docket/65386646/united-states-v-evolve-bank-and-trust/
Last updated March 21, 2023, 3:01 a.m.
State / Territory: Tennessee
Case Type(s):
Fair Housing/Lending/Insurance
Key Dates
Filing Date: Sept. 29, 2022
Case Ongoing: Yes
Plaintiffs
Plaintiff Description:
United States Department of Justice
Plaintiff Type(s):
U.S. Dept of Justice plaintiff
Attorney Organizations:
U.S. Dept. of Justice Civil Rights Division
Public Interest Lawyer: Yes
Filed Pro Se: No
Class Action Sought: No
Class Action Outcome: Not sought
Defendants
Evolve Bank and Trust, Private Entity/Person
Defendant Type(s):
Case Details
Causes of Action:
Fair Housing Act/Fair Housing Amendments Act (FHAA), 42 U.S.C. §§ 3601 et seq.
Equal Credit Opportunity Act (ECOA), 15 U.S.C. § 1691
Available Documents:
Injunctive (or Injunctive-like) Relief
Outcome
Prevailing Party: Plaintiff
Nature of Relief:
Injunction / Injunctive-like Settlement
Source of Relief:
Form of Settlement:
Court Approved Settlement or Consent Decree
Amount Defendant Pays: 1,350,000
Order Duration: 2022 - None
Content of Injunction:
Develop anti-discrimination policy
Issues
Discrimination-area:
Discrimination-basis:
National origin discrimination
Race:
Affected Sex or Gender:
National Origin/Ethnicity: