Wintrust has asked a federal judge to dismiss a discrimination lawsuit that accused the bank of denying 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 buyers.
Attorneys with the firm of Stowell & Friedman, of Chicago, filed the complaint May 25. Plaintiffs allege one of the city’s most prominent local banking brands violated federal civil rights laws, including the Equal Credit Opportunity Act and the Fair Housing Act.
Through its attorneys, Mayer Brown, of Chicago, Wintrust responded with a motion filed Aug. 1, asking Judge John Blakey to agree the complaint lacks evidence to support its claims.
The lawsuit’s “allegations of discrimination are not only baseless, but also contrary to Wintrust’s core fair lending principles,” the company asserted. “In addition to actively partnering with many civic groups throughout the Chicago region to ensure affordable access to mortgage lending and other banking services, Wintrust consistently earns top ratings from federal regulators in its fair lending-related Community Reinvestment Act examinations.”
The lawsuit was filed on behalf of named plaintiff Kathleen Bankhead, identified as an Illinoisan who worked for two decades as a Cook County State’s Attorney’s Office prosecutor and now is an independent juvenile ombudsperson for the Illinois Department of Juvenile Justice. The complaint asserts Wintrust offered Bankhead a locked rate of 3.25%, allegedly greater than the rates offered to white 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.”
Broader allegations include a claim Wintrust approved 59.5% of Black mortgage applicants, compared to 73% of white applicants, denied 12% of Black applicants “outright,” compared to 5.5% of white applicant and charged Black borrowers a national average interest rate of 3.31% compared to 3.21% for white buyers. The alleged disparities also extend to mortgage refinancing, claiming Wintrust approved 56% of such applications from Black borrowers, compared to 68.7% of white applicants, while charging Black applicants 2.1% of the loan value, versus 1.7% for white borrowers.
Wintrust told Judge Blakey the complaint is “based solely on purported statistical disparities in public data,” including an unspecified data analysis of Home Mortgage Disclosure Act figures. In order to proceed, Wintrust continued, the complaint needs to have alleged the bank had specific policies that caused the alleged statistical disparities. However, the complaint identifies no single corporate policy.
“This failure is especially problematic because regulators and courts have explicitly warned that HMDA data alone cannot show discrimination because the data do not take into account legitimate underwriting standards,” Wintrust said, noting the Consumer Financial Protection Bureau issued a bulletin in June clearly stating “HMDA data are generally not used alone to determine whether a lender is complying with fair lending laws.”
Bankhead obtained a mortgage in June 2020 for a home on East 48th Street in Chicago. Wintrust said she didn’t “identify any enforceable agreement, promise or representation — in (her) mortgage or otherwise — let alone that Wintrust breached” a commitment to give her the lowest interest rate or a “free float down.”
The plaintiffs seek to expand the lawsuit to a class action, which could ultimately include virtually every Black mortgage borrower who applied for or received a loan through Wintrust in recent years. The complaint 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.”
Wintrust asked Blakey to dismiss the complaint with prejudice, which would block the plaintiffs from attempting to continue their lawsuit.