Fairway Independent Mortgage Corporation to Pay Nearly $10 Million for Redlining Black Neighborhoods in Birmingham

Fairway Independent Mortgage Corporation has agreed to pay $8 million and an additional $1.9 million civil penalty to resolve allegations of redlining predominantly Black neighborhoods in Birmingham, Alabama. This settlement is part of the Justice Department’s Combating Redlining Initiative, which has now secured over $150 million in relief for communities of color nationwide.

Redlining, an illegal practice where lenders avoid providing credit services based on race, has historically limited financial access and homeownership opportunities in Black and minority communities. “This case is a reminder that redlining is not a relic of the past, and the Justice Department will continue to work urgently to combat lending discrimination wherever it arises and to secure relief for the communities harmed by it,” said Attorney General Merrick Garland.

The Justice Department, in conjunction with the Consumer Financial Protection Bureau (CFPB), accused Fairway of focusing its marketing efforts solely on majority-white areas. At the same time, its retail loan offices were similarly located in majority-white neighborhoods. Fairway’s practices allegedly discouraged Black residents from applying for loans, with the company originating loans in Black neighborhoods at a rate far below that of its peers.

As part of the settlement, Fairway agreed to establish a $7 million loan subsidy fund to provide affordable home purchase, refinance, and home improvement loans for Black residents in Birmingham. Additionally, the company will invest $1 million in programs designed to support this fund, including financial education initiatives and community partnerships to help address the longstanding impacts of discriminatory lending.

“This settlement will provide Birmingham’s Black neighborhoods with the access to credit they have long been denied and increase opportunities for homeownership and generational wealth,” remarked Kristen Clarke, Assistant Attorney General for the Justice Department’s Civil Rights Division.

In addition to the financial commitments, Fairway will also open a new loan office in a majority-Black neighborhood in Birmingham and invest heavily in local advertising and outreach programs aimed at Black communities.

Fairway’s $1.9 million penalty will be paid into the CFPB’s Civil Penalty Fund, which provides restitution to victims of financial misconduct. “The CFPB and Justice Department are holding Fairway accountable for redlining Black neighborhoods,” offered CFPB Director Rohit Chopra.