If you were black or Hispanic and wanted a home loan, a number of banks put you on a separate, more expensive track regardless of your credit score and gainful employment.
These rates, the Justice Department alleges, were based on the color of your skin -- practices that helped mushroom the extent of the U.S. housing crisis.
The pattern is becoming increasingly clear from a series of court settlements negotiated with lenders by the department and the Consumer Financial Protection Bureau over the last three years with the likes of Bank of America, Wells Fargo, Suntrust and now PNC Financial Services Group.
The latest settlement, requiring PNC to pay $35 million, was announced on Monday, Dec. 23rd and covers the behavior of the National City Bank. The Cleveland-based bank was later purchased by Pittsburgh-based PNC.
In late 2011, the department sued Countrywide Financial Corp., for the first time alleging that a major lender had steered minorities into so-called sub-prime mortgages with higher interest rates, based solely on their race. Bank of America, which had acquired Countrywide, paid a record $335 million to settle allegations that 200,000 minorities had been charged higher interest rates than white borrowers between 2004 and 2008.
Then in May 2012, after a 2 1/2-year inquiry that included a review of 850,000 residential mortgage loans, the department reached a $21 million settlement with SunTrust Mortgage, a subsidiary of Atlanta-based SunTrust Bank, stemming from allegations that of racial bias against minorities between 2005 and 2009.
In July 2012, the nation's largest home loan originator -- Wells Fargo -- paid $175 million to settle charges that it steered about 4,000 minorities in the Mid-Atlantic region into more expensive sub-prime loans even though they qualified for better terms. Rates for sub-prime loans, by definition, rose sharply after an initial period. The Wells Fargo settlement stated that the bank asserted it had "treated all of its customers fairly and without regard to impermissible factors such as race and national origin."
A federal civil rights suit filed along with Monday's proposed settlement in U.S. District Court for the Western District of Pennsylvania alleges that National City Bank, its 400 retail offices and its national network of mortgage brokers stuck more than 75,000 African-American and Hispanic borrowers across the country with higher loan rates and fees between 2002 and 2008.
"This settlement will provide deserved relief to thousands of African-American and Hispanic borrowers who suffered discrimination at the hands of National City Bank," Attorney General Eric Holder said.
Steve Dettelbach, the U.S. attorney for the Northern District of Ohio, said that "it undermines confidence in our banking system when people get different deals not only based on their credit scores, but their skin color. With all the positive things for which National City Bank stood for so many years, this is a troubling epilogue to be entered on the other side of the ledger. Hopefully, today's settlement will afford some relief to customers who were shortchanging by this conduct."
However, if all 75,000 victims took the time to file claims -- and they won't -- the proposed settlement would average just $467 per discrimination victim.
Thomas Perez, who headed the Justice Department's Civil Rights Division until his recent promotion to serve as Labor Secretary, said in a speech in 2011 that he had noticed upon arriving in his Justice job that the "fair lending enforcement program had waned in the prior administration."
Perez made clear that he strongly disagreed with those who contended there was "a tension" between keeping a bank sound and effective enforcement against fair lending violations.
Later, in announcing the Wells Fargo case, he cited an 80-year-old African-American resident in Baltimore with a solid 714 credit score and "a rock solid credit file" who got a sub-prime loan instead of a prime loan and wasn't told that she may have qualified for better terms.
"By the time she realized she had an adjustable-rate mortgage, and not the fixed rate she thought," he said, "it was too late. The damage was done."
The loan practices, he said, played a role in enlarging the dimensions of the sub-prime mortgage crisis that sank the global economy when the U.S. housing bubble burst in 2007 and 2008.