I Consumer Financial Protection Bureau (CFPB) on Friday announced that it wants to settle with the Chicago-based Townstone Financial share price that would solve the case for what the office calls “discriminatory lending practices and redevelopment of African American neighborhoods in Chicago.”
The proposed order would prohibit Townstone from taking any action that would violate the Equal Credit Opportunity Act (ECOA) and require Townstone to pay a $105,000 fine to the CFPB’s victim assistance fund.
Townstone described the deal as “positive” in a statement HousingWire after this story was originally published. It elaborated that one part of the agreement is that “Barry Sturner, president and CEO of Townstone, is dismissed from the lawsuit, and Townstone neither admits nor denies that it is guilty of the conduct alleged in the complaint.”
“My family and I are relieved to finally put this nightmare behind us,” Sturner said in a statement. “The last six years have affected us all.”
Steve Simpson, senior attorney no Pacific Legal Foundation (PLF) representing Townstone in this matter, said that the case should never have been brought.
“Unfortunately, the federal government has enormous resources and power to destroy lives and livelihoods, so settlement is often the best option for anyone facing a crime of this nature,” Simpson said.
PLF will “continue to fight against abuses by the CFPB and other federal agencies,” the organization said.
The move forward for the ruling follows a lengthy court battle, and a July ruling by United States Court of Appeals for the Seventh Circuit that also reaffirmed the Bureau’s authority to prohibit discrimination against credit applicants and to discourage applicants from applying for credit under the ECOA.
“The CFPB’s case against Townstone Financial represents a major appellate court victory that makes clear that individuals are protected from illegal refinancing even before they file a claim,” CFPB Director Rohit Chopra said in a statement. “The CFPB will continue to prosecute those who practice restructuring.”
In the summer of 2020, the CFPB filed a lawsuit against Townstone, alleging that it violated ECOA Regulation B by drawing “virtually no applications for properties in predominantly African-American neighborhoods” and “few applications from African-Americans” in the township. from Chicago. place.
This was discrimination, the CFPB said. In October 2020, Townstone moved to have the lawsuit dismissed. A federal judge in Illinois ruled in favor of Townstone in February 2023, but the CFPB vowed to appeal the case, resulting in its authority under ECOA being reaffirmed by a three-judge panel.
A settlement agreement will have to be made by the court, which has yet to happen.
Editor’s note: This story is reviewed from the perspective of Townstone, its founder and CEO and the Pacific Legal Foundation’s senior attorney representing the company.
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