JP Morgan Chase is one of the oldest financial institutions in the United States with a 200 year history. Their assets are currently valued at $2.4 trillion, they have a presence in over 100 countries, and has over 235,000 employees. However, a recent case was filed against them, questioning practices from over 10 years ago.
A lawsuit was filed on Wednesday which accused J.P. Morgan Chase of discriminatory practices from 2006 to 2009. They allegedly charged higher interests on mortgages when the borrower was either Hispanic or African American compared to Caucasian borrowers. As a result of this, minority borrowers had paid more than $1,000 more during the first 5 years of their loan.
According to the report done by Reuters, Hispanic borrowers paid an average of $968 additional while African-Americans paid an average of $1,126 additional. An estimated 53,000 borrowers of Hispanic or African-American heritage were wrongfully given higher interest rates which cost tens of millions more than white borrowers.
These allegations were directed toward the wholesale-mortgage practice J.P. Morgan had until 2009. This program made use of third-party mortgage-broker firms to mediate the loan between borrowers and the bank. These firms would assess credit and offer loan terms before handing the application to J.P Morgan for funding.
In The Atlantic's report on the matter, it stated the J.P. Morgan allowed these firms to vary the interest rates they charged based on factors other than creditworthiness. And though not directly at fault in the matter, it was their disregard and lack of responsibility for the loans sent in by the independent firms caused an incident which could and should have been avoided.
"We've agreed to settle these legacy allegations that relate to pricing set by independent brokers," said Elizabeth Seymour in a report by BBC. Seymour added "we deny any wrongdoing and remain committed to providing equal access to credit."
