Photo: Luther Bank Savings Settles Discrimination Suit
The Justice Department announced yesterday that Luther Burbank Savings will invest $2 million in California communities and take other steps as part of a settlement to resolve allegations that it engaged in a pattern or practice of discrimination on the basis of race and national origin.
The complaint alleges that from 2006 through 2010, Luther Burbank Savings, a prime lender, originated very few single-family residential mortgage loans to African-American or Hispanic borrowers or in majority-minority tracts throughout California. In the greater Los Angeles area, for example, only 5.8 percent of Luther’s single-family residential mortgage loans were made to African-American and Hispanic borrowers during this time period, compared to 31.8 percent of such loans made to African-American and Hispanic borrowers by comparable prime lenders.
The complaint alleges that Luther maintained a $400,000 minimum loan amount policy despite its knowledge that it was a key cause of the low level of lending to African-American and Hispanic borrowers.