Luther Burbank Savings—which has branches in , Pasadena and Burbank—will invest $2 million in financing programs in the Southland and elsewhere to settle allegations that it engaged in a pattern of discrimination on the basis of race and national origin, the Justice Department announced Tuesday.
The settlement, which is subject to court approval, was filed in conjunction with a Los Angeles federal court complaint alleging that from 2006 through mid-2011, Luther enforced a $400,000 minimum loan amount policy for its wholesale single-family residential mortgage loan program.
Prosecutors contend the policy had a disparate impact on the basis of race and national origin.
"Today's settlement demonstrates that the Justice Department is committed to addressing a wide range of abuses in the credit market," said Thomas E. Perez, assistant attorney general for the DOJ's Civil Rights Division. "It is critical that lenders have policies in place to ensure that they don't discriminate in their lending programs."
The complaint alleges that from 2006 through 2010, Luther Burbank Savings, a prime lender, originated very few single-family residential mortgage loans to black or Latino 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 black and Latino borrowers during this time period, compared to 31.8 percent of such loans made to similar borrowers by comparable prime lenders, according to the filing.