Wintrust Bank has been hit with a race discrimination lawsuit, accusing the bank of denying more Black applicants for home mortgages at a higher rate than their white counterparts, and approving Black mortgage borrowers at terms more onerous than those charged to white home buyers.
On May 25, attorneys with the firm of Stowell & Friedman, of Chicago, filed suit in Chicago federal court.
The complaint accuses Wintrust of violating federal civil rights laws, including the Equal Credit Opportunity Act and the Fair Housing Act, in the way it processes home mortgage loans in the Chicago area and nationwide.
Linda D. Friedman
| stowellfriedman.com
The lawsuit was filed on behalf of named plaintiff Kathleen Bankhead. She is identified in the complaint as an Illinois resident who worked for two decades as a prosecutor in the Cook County State’s Attorney’s office and now is employed as an independent juvenile ombudsperson for the Illinois Department of Juvenile Justice.
She is described as “a well-qualified African American home borrower and well-respected member of her community.”
However, in 2020, the complaint asserts Wintrust offered Bankhead a mortgage to purchase a residential property that was at “a higher interest rate with less favorable terms and conditions because of her race and because she was purchasing property in an area that was majority-minority.”
The complaint does not specify the community in which Bankhead sought to purchase her home.
However, the complaint asserts Wintrust offered Bankhead a locked rate of 3.25%, but the complaint asserts that was higher than the rates offered to white home buyers, and refused to grant her a “free float down,” to allow her rates to decrease should market conditions warrant, without paying a fee. Further, the complaint asserts Wintrust “demanded several hundred dollars in fees to extend the rate lock.”
“Wintrust’s actions ultimately forced (Bankhead) into a mortgage loan with a higher interest rate, higher costs and fees, and fewer credits than Wintrust charged to similarly situated non-African American borrowers,” the complaint said, costing her more money in fees and in interest each month and over the life of the loan.
The complaint claims Bankhead’s experience with Wintrust is representative of the bank’s alleged treatment of many other Black home buyers, who apply for a home mortgage loan through Wintrust.
For instance, the complaint claims Wintrust allegedly approved 59.5% of Black mortgage applicants, compared to 73% of white applicants.
Further, the complaint asserts Wintrust denied 12% of Black applicants “outright,” compared to 5.5% of white applicants.
And the complaint claims the alleged discrimination is evident in interest rates charged to Black borrowers. According to the compliant, Wintrust charged Black borrowers a national average interest rate of 3.31% compared to 3.21% for white home buyers.
The alleged racial disparities also extend to home loan refinancing. According to the complaint, Wintrust approved 56% of refinancing applications from Black borrowers, compared to 68.7% of white refinancing applicants, while charging Black applicants 2.1% of the loan value, versus 1.7% for white borrowers.
The complaint does not break out the comparisons by household income, or any category other than race.
The complaint accuses Wintrust of engaging in “redlining” – a historical discriminatory lending practice designed to block Black homeowners from purchasing homes, particularly in certain communities – and “reverse redlining,” or the practice of giving Black borrowers loans at substantially worse terms than white borrowers, so as to make it more difficult for Black home buyers to ultimately keep their real estate investment.
“Wintrust’s policies have discriminatorily extracted an enormous amount of wealth out of Black and/or African American households through higher costs, fees, and interest rates than charged to non-Black, non-African Americans,” the complaint said.
The plaintiffs seek to expand the lawsuit to a class action, which could ultimately include virtually every Black home mortgage borrower who applied for or received a loan through Wintrust in recent years.
The lawsuit asks the federal court to order Wintrust to “offer loans at non-discriminatory rates … and otherwise make Plaintiff and all (other similar Black borrowers) whole;”
To implement new “policies and procedures to avoid racially discriminatory approvals, rejections, interest rates, fees, costs, credits, terms, conditions and other policies; and
Award unspecified compensatory and punitive damages, with interest, plus attorney fees.
The plaintiffs are represented by attorneys Linda D. Friedman, Suzanne E. Bish and George Robot, of the Stowell & Friedman firm.