MEMPHIS, Tenn. — A bank based here in Memphis is taking a financial hit for discrimination.

From 2014 to 2019, authorities say the Evolve Bank And Trust charged Black, Hispanic, and female borrowers more for home loans, regardless of their credit rating.

Under the department’s settlement, Evolve Bank will establish a settlement fund of $1.3 million to compensate affected borrowers. Evolve is also expected to pay a $50,000 civil penalty.

Evolve Bank, which is headquartered in Memphis, maintains mortgage lending offices and provides mortgage lending services in 15 states.

According to a complaint, the Justice Department claims that Evolve Bank violated the Fair Housing Act and the Equal Credit Opportunity Act, which prohibits financial institutions from discriminating on the basis of race, sex, or national origin in their mortgage lending services.

The complaint specifically alleged that Evolve Bank’s loan pricing practices caused Black, Hispanic, and female borrowers to pay more in the “discretionary pricing” components of home loans than white or male borrowers for “reasons unrelated to their creditworthiness”.

The Justice Department said it opened the investigation after the Board of Governors of the Federal
Reserve System referred the matter.

“This settlement provides some measure of justice to those wronged by Evolve Bank’s discriminatory acts,” said U.S. Attorney Kevin G. Ritz for the Western District of Tennessee. “I also hope it sends a strong message to banks and other lenders that the Department of Justice won’t stand for unlawful barriers in residential mortgage lending. It’s past time for these practices to stop.”

The Justice Department said Evolve Bank has taken steps to revise its policies and practices since it was notified of the investigation.

During the term of the proposed consent order, Evolve will maintain policies that reduce loan officer discretion, employ a fair lending officer who will work in close consultation with the bank’s leadership, and provide fair lending training to its personnel.

Evolve Bank & Trust sent a statement on this matter:

“Evolve denies liability and any and all wrongdoing on the basis that it believes that it priced its mortgages fairly for all borrowers. Specifically, Evolve confidently maintains that its annual testing of mortgage loan pricing during the 2014 through 2019 time period, which was consistent with accepted industry standards and applicable laws, showed no pattern or practice of statistically significant disparities in the Annual Percentage Rates (“APR”) that would constitute a violation of the ECOA or FHA.”

Lending discrimination can be reported by calling the Justice Department’s Housing Discrimination tip line at 1-833-591-0291 or online.