Editor's note: This article has been revised and updated from an earlier version to include response and statements from Townstone Financial.
A mortgage lender, made regionally famous from years in prominent placement on Chicago area radio broadcasts, has been sued by the federal consumer protection agency, claiming the company’s leaders and spokespeople have discriminated against Black people by speaking negatively about troubled Chicago area communities in which many Black people and other minorities live.
The lender has fired back, asserting in a statement the lawsuit by the Consumer Financial Protection Bureau is merely an extension of the U.S. culture war, and an attempt by left-wing activists to use the power of the federal government to silence speech with which it disagrees.
"The CFPB is engaging in an outrageous trampling on the First Amendment," Townstone's attorney James Bopp Jr., said in a statement issued July 16. "Regardless of the content of the political speech, whether it is liberal or conservative, neither the political speech of a financial services company or its owners or executives, nor the political leaning of the media outlets on which a financial services company advertises, should be the basis of a fair lending allegation by the CFPB or any other agency."
On July 15, the CFPB filed suit in Chicago federal court against Townstone Financial Inc.
In the complaint, the CFPB accuses Townstone of “unlawful redlining” by engaging in “acts or practices” which the agency said would discourage Black would-be homebuyers from seeking a loan from Townstone.
The lawsuit specifically targets statements made by Townstone representatives on the air during Chicago area radio broadcasts between 2014-2017.
“… During its weekly marketing radio shows and podcasts, Townstone made statements about African-Americans and predominantly African-American neighborhoods that would discourage African-American prospective applicants from applying to Townstone for mortgage loans,” the CFPB said in its complaint.
The complaint identified several specific instances of such alleged behavior.
According to the complaint, these included:
- In January 2017, Townstone CEO Barry Sturner allegedly related his experiences shopping at “the Jewel on Division” in Chicago. He referred to that particular supermarket as “Jungle Jewel,” adding: “There were people from all over the world going into that Jewel. It was packed. It was a scary place;”
- In June 2016, Sturner, in discussing “mortgage-lending services that Townstone could provide to police officers and others” described weekends on the South Side of Chicago as “hoodlum weekend,” adding: Police are “the only ones between that turning into a real war zone and keeping it where it’s kind of at;”
- In November 2017, during a discussion of skydiving and the resulting adrenaline “rush” that follows, a Townstone executive allegedly “suggested that ‘walking through the South Side at 3 a.m. [would] get the same rush;’”
- In January 2014, in giving advice on how to get a home ready for sale, a former Townstone executive and co-hosts of the Townstone show said home sellers should “change the light fixtures, paint it from top to bottom,” and “take down the Confederate flag;” and
- In January 2014, Townstone’s former president allegedly told a caller from Markham, a suburban community with a large Black population, that “it’s crazy in Markham on weekends,” and “You drive very fast through Markham … you don’t look at anybody or lock on anybody’s eyes in Markham … You look at your dashboard, you don’t lock on anybody.”
Townstone said the CFPB has either mischaracterized those statements and falsely imputed discriminatory intent.
In the statement, Bopp replied to each of the specific instances cited by the CFPB in its complaint.
Bopp said:
▪ It is well-known that people in Chicago called the grocery store referenced in the complaint “Jungle Jewel;”
▪ Regarding the “hoodlum weekend” comment, it was simply referring to a term that Chicago police officers had used. In addition, the word “hoodlum” is not an inherently racial term, as the CFPB alleges.
▪ Regarding the “war zone” comment, it is a well-known fact – recognized by people from across the political spectrum – that the South Side of Chicago has a high crime rate. Chicago’s South Side has often been described as a “war zone” by many people who are working to quell violence on the South Side.
▪ Regarding the “skydiving” comment, we simply do not see how this statement is at all offensive. The South Side of Chicago has a high crime rate, a factual statement that cannot be refuted. Walking at night in a high crime area is dangerous. Skydiving similarly is dangerous. In fact, Townstone believes anyone who has lived in any urban area, not only the South Side of Chicago, would understand the concern with, or warn friends and relatives from walking around in the middle of the night, regardless of the racial demographics of the area.
▪ Regarding the Confederate flag comment, the comment is about “taking down” a Confederate flag, not putting one up. It is not discriminatory to talk about taking down a Confederate flag.
▪ Regarding the Markham comment, as noted above, if an area has a high crime rate, that is a fact. Discussing facts and how one should stay safe in an area of high crime cannot be the basis of a fair lending violation.
Bopp and Townstone noted: "The CFPB is struggling so hard to find evidence of discrimination that they have reached back over five years to quote two statements made by a former owner, and not by anyone currently at Townstone."
The CFPB complaint further asserts Townstone did not market to Black applicants, “even though African Americans made up 30% of the population of the City of Chicago.”
Nor did Townstone employ any Black loan officers, even though employing such loan officer could encourage Black people to apply, the CFPB alleged. Townstone denied this claim, saying it has employed a Black loan officer, as well as other ethnic minority loan officers, including those of Hispanic and Asian heritages.
In all, the CFPB said only 37 of 2,700 loan applications processed by Townstone from 2014-2017 came from Black applicants in the Chicago area. Other mortgage lenders processed 119,370 applications from Black applicants out of more than 1.2 million completed in the Chicago area during that same time period.
“The totality of Townstone’s statements, acts, and practices described herein constitute redlining of African-American neighborhoods in the Chicago (area) and discouragement on the basis of race,” the CFPB wrote in its complaint.
Bopp and Townstone said the CFPB's claims are false.
Bopp said Townstone has advertised for years on several radio stations, including sports stations, "to reach as many listeners from as many backgrounds as possible."
Townstone said it has also advertised in Arabic and Chinese languages.
"Townstone has been in business since July 2002 and has not received any fair lending complaints in its entire history 18-year history," Bopp said in the statement. "And despite the hundreds of thousands of Townstone’s emails and other documents, the CFPB has not cited one with any racial slurs and other potentially offensive terminology in its Complaint."
The mortgage broker said the complaint is politically motivated, taking aim at Townstone because it has chosen to host a marketing radio program on AM560 The Answer, a conservative political talk radio station owned by Salem Media.
"Essentially, (CFPB Director Kathy Kraninger) is saying in this lawsuit that financial institutions are engaging in unlawful discrimination if they advertise too much on conservative media, or if their owners, executives, or staff express conservative political viewpoints, such as statements in support of the police," Townstone and Bopp said in the statement. "This is the next step in the left’s 'cancel culture.' They are now using the enforcement powers of the federal government to attack free speech, speech they do not want you to hear."
The CFPB alleged Townstone had violated the federal Equal Credit Opportunity Act.
The CFPB said it was seeking an injunction against Townstone, civil money penalties against Townstone, and further “damages, restitution, equitable, and other monetary relief.”
The CFPB is represented by its bureau attorneys based in Chicago and Washington, D.C.
Townstone is represented by Bopp, of Terre Haute, Ind.; as well as Richard Horn of Garris Horn LLP, of Dallas; Sean Burke, of Mattingly Burke Cohen & Biederman LLP, of Indianapolis; and Marx Sterbcow of The Sterbcow Law Group LLC, of New Orleans.