On February 5, the U.S. District Court for the Northern District of Illinois dismissed with prejudice a putative class action lawsuit alleging race discrimination in mortgage lending. The plaintiff, an African American woman, sought relief on behalf of herself and a proposed class, claiming that she received less favorable loan terms and was denied a “float down” option, which would have reduced the interest rates charged to the plaintiff if market rates decreased, when purchasing a home in a majority-Black Chicago neighborhood. She argued that the defendants’ lending policies violated the ECOA, the FHA, and provisions of federal civil rights law (42 U.S.C. §§ 1981 and 1982) and supported her claims with HMDA data showing Black applicants had lower approval rates and paid higher fees than white applicants. In her second amended complaint, following the dismissal of her first amended complaint for failure to state a claim, the plaintiff added the allegation that decisions regarding loan costs, fees and rates were delegated to “largely non-Black loan personnel,” aiming to strengthen her claims of intentional discrimination.
The court held that the plaintiff’s complaint did not meet federal pleading standards for either disparate treatment or disparate impact, emphasizing in the latter case that statistics alone are not enough under the ECOA and the FHA unless causally tied to a specific, artificial, arbitrary or unnecessary policy. The judge found that the plaintiff failed to identify any concrete policy causing the alleged disparities and determined that the amended allegation about “largely non-Black loan personnel” was insufficient on its own to suggest plausibly discriminatory animus or link loan officers’ discretion to race. Because the federal claims were dismissed, the court declined to exercise supplemental jurisdiction over the state law claims, ending the case.
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