Justice Department and Consumer Financial Protection Bureau Reach $35 Million Settlement to Resolve Allegations of Lending Discrimination by National City Bank

Monday, December 23, 2013

The Justice Department and the Consumer Financial Protection Bureau filed a consent order today to resolve allegations that National City Bank engaged in a pattern or practice of discrimination that increased loan prices for African-American and Hispanic borrowers who obtained residential mortgages between 2002 and 2008 from National City Bank’s retail offices and nationwide network of mortgage brokers.

The settlement, which is subject to court approval, was filed in conjunction with the agencies’ complaint in the U.S. District Court for the Western District of Pennsylvania.  The complaint alleges that National City Bank violated the Fair Housing Act and the Equal Credit Opportunity Act (ECOA) by charging more than 75,000 African-American and Hispanic borrowers higher loan prices not based on borrower risk, but because of their race or national origin.  Specifically, the allegations involve loans made to African-American and Hispanic borrowers through the more than 400 retail offices directly operated by National City Bank nationwide between 2002 and 2008.  The allegations also involve loans made to African-American and Hispanic borrowers between 2003 and 2008 through National City Bank’s national network of mortgage brokers.  National City Bank, which was headquartered in Cleveland , Ohio, was purchased in 2009 by Pittsburgh-based PNC Financial Services Group, which is the successor in interest to National City Bank.

“This settlement will provide deserved relief to thousands of African-American and Hispanic borrowers who suffered discrimination at the hands of National City Bank,” said Attorney General Eric Holder.  “As alleged, the bank charged borrowers higher rates not based on their creditworthiness, but based on their race and national origin.  This alleged conduct resulted in increased loan prices for minority borrowers.  This case marks the Justice Department’s latest step to protect Americans from discriminatory lending practices, and shows we will always fight to hold accountable those who take advantage of consumers for financial gain.”

“With today’s settlement, thousands of African-American and Hispanic borrowers who were discriminated against by National City Bank will be entitled to compensation,” said Acting Assistant Attorney General Jocelyn Samuels for the Justice Department’s Civil Rights Division.  “We look forward to further collaboration with the Bureau in protecting consumers from illegal and discriminatory lending practices.”

“Borrowers should never have to pay more for a mortgage loan because of their race or national origin,” said Consumer Financial Protection Bureau Director Richard Cordray.  “Today’s enforcement action puts money back in the pockets of harmed consumers and makes clear that we will hold lenders accountable for the effects of their discriminatory practices.”

“It undermines confidence in our banking system when people get different deals not only based on their credit scores, but their skin color,” said U.S. Attorney for the Northern District of Ohio Steve Dettelbach.  “With all the positive things for which National City Bank stood for so many years, this is a troubling epilogue to be entered on the other side of the ledger.  Hopefully, today’s settlement will afford some relief to customers who were shortchanged by this conduct.”

“Our commitment to assure fair and equal treatment under the law is absolute,” said David J. Hickton, U.S. Attorney for the Western District of Pennsylvania.  “This settlement addresses a serious failure by National City to protect potential homebuyers from discriminatory lending practices.”

National City Bank’s business practices allowed its loan officers and mortgage brokers discretion to vary a loan’s interest rate and fees from the price it set based on the borrower’s objective credit-related factors.  This subjective and unguided pricing discretion resulted in African-American and Hispanic borrowers paying more than similarly qualified non-Hispanic White borrowers.

The allegations in the complaint relate solely to loans originated by National City Bank and do not relate to any mortgage lending practices of PNC Financial Services Group.

Under the terms of the proposed settlement, PNC will pay $35 million dollars into a fund for the benefit of victims of National City Bank’s mortgage discrimination.  The proposed settlement provides for an independent administrator to contact and disburse payments to borrowers whom the agencies’ identify as victims of National City Bank’s discrimination, at no cost to the borrowers.  PNC will pay all costs and expenses of the administrator.  Borrowers who are eligible for compensation will be contacted by the administrator.  The department will make a public announcement and post contact information on its website once the administrator begins contacting victims.  Individuals who believe that they may have been victims of lending discrimination by National City Bank and have questions about the settlement may email the department at nationalcitybank@usdoj.gov .

The Justice Department’s enforcement of fair lending laws is conducted by the Fair Lending Unit of the Housing and Civil Enforcement Section in the Civil Rights Division.  Since the Fair Lending Unit was established in February 2010, it has filed or resolved 31 lending matters under the Fair Housing Act, ECOA and the Servicemembers Civil Relief Act.  The settlements in these matters provide for over $800 million in monetary relief for impacted communities and individual borrowers.  The Attorney General’s annual reports to Congress subject to ECOA highlight the department’s accomplishments in fair lending and are available at www.justice.gov/crt/publications .

The Civil Rights Division and the Consumer Financial Protection Bureau are members of the Financial Fraud Enforcement Task Force.  President Obama established the interagency task force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources.  The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets and recover proceeds for victims of financial crimes.  For more information on the task force, visit www.StopFraud.gov.

A copy of the complaint and proposed order, as well as additional information about fair lending enforcement by the Justice Department, can be obtained from the Justice Department website at www.justice.gov/fairhousing.


Free Tax Help Available Nationwide

WASHINGTON — Over 12,000 free tax preparation sites will be open nationwide this year as the Internal Revenue Service continues to expand its partnerships with nonprofit and community organizations providing vital tax preparation services for low- to moderate-income and elderly taxpayers.

The IRS Volunteer Income Tax Assistance (VITA) Program offers free tax help to people who earn less than $49,000. The Tax Counseling for the Elderly (TCE) Program offers free tax help to taxpayers who are 60 and older.

Today, partners and local officials will be hosting news conferences or issuing news releases nationwide to highlight the Earned Income Tax Credit (EITC) and their free tax preparation programs. The EITC is one of the federal government’s largest benefit programs for working families and individuals. But taxpayers must file a tax return, even if they do not have a filing requirement, and specifically claim the credit to get the benefit.

Taxpayers need to present the following items to have their returns prepared:

  • Photo identification
  • Valid Social Security cards for the taxpayer, spouse and dependents
  • Birth dates for primary, secondary and dependents on the tax return
  • Wage and earning statement(s) Form W-2, W-2G, 1099-R, from all employers
  • Interest and dividend statements from banks (Forms 1099)
  • A copy of last year’s federal and state returns, if available
  • Bank routing numbers and account numbers for direct deposit
  • Other relevant information about income and expenses
  • Total paid for day care
  • Day care provider’s identifying number

To file taxes electronically on a Married Filing Jointly tax return, both spouses must be present to sign the required forms.

Trained community volunteers can help eligible taxpayers with all special credits, such as the EITC, Child Tax Credit or Credit for the Elderly. Also, many sites have language specialists to assist people with limited English skills. To locate the nearest VITA site, taxpayers should check the VITA site List available online at http://links.govdelivery.com/track?type=click&enid=bWFpbGluZ2lkPTExOTA4MzcmbWVzc2FnZWlkPVBSRC1CVUwtMTE5MDgzNyZkYXRhYmFzZWlkPTEwMDEmc2VyaWFsPTEyNzY1NjEzODYmZW1haWxpZD1ydWRkamFuZXRAaG90bWFpbC5jb20mdXNlcmlkPXJ1ZGRqYW5ldEBob3RtYWlsLmNvbSZmbD0mZXh0cmE9TXVsdGl2YXJpYXRlSWQ9JiYm&&&127&&&http://www.IRS.gov or call 1-800-906-9887.

As part of the IRS-sponsored TCE Program, AARP offers the Tax-Aide counseling program at more than 7,000 sites nationwide during the filing season. Trained and certified AARP Tax-Aide volunteer counselors help people of low-to-middle income with special attention to people age 60 and older. To locate the nearest AARP Tax-Aide site, call 1-888-227-7669 or visit AARP’s Internet site.

The military also partners with the IRS to provide free tax assistance to military personnel and their families. The Armed Forces Tax Council (AFTC) consists of the tax program coordinators for the Army, Air Force, Navy, Marine Corps and Coast Guard. The AFTC oversees the operation of the military tax programs worldwide, and serves as the main conduit for outreach by the IRS to military personnel and their families. Volunteers are trained and equipped to address military specific tax issues, such as combat zone tax benefits and the effect of the EITC guidelines.

In addition to free tax return preparation assistance, most sites use free electronic filing. An e-filed tax return means a fast refund. Taxpayers who combine e-file and direct deposit can generally get their refunds in as few as 10 days.

Taxpayers who file electronically also can opt to file now and pay later. If taxpayers owe, they can make a payment April 18, 2011, by authorizing an electronic funds withdrawal (direct debit) from a checking or savings account, paying by credit card, by check or money order (made out to the United States Treasury) using Form 1040-V, Payment Voucher.

For taxpayers who want to prepare and e-file their own tax returns, there is IRS Free File. Everyone can use Free File, the free way to prepare and e-file federal taxes either through brand-name software or online fillable forms. Individuals or families with 2010 adjusted gross incomes of $58,000 or less can use Free File software. Free File Fillable Forms, the electronic version of IRS paper forms, has no income restrictions. For either service, taxpayers must go through www.irs.gov/freefile to access the programs.

Taxpayers also can seek free assistance at the 400 IRS Taxpayer Assistance Centers nationwide. On Saturday, Jan. 29, and Saturday, Feb. 5, the IRS will open selected offices to provide special assistance to EITC eligible taxpayers. In addition, a number of community partners will also open their doors. Locations nationwide are listed on www.IRS.gov.
Related Items:

  • FS-2011-8, EITC Eligibility Rules for 2010 Tax Year Outlined
  • IR-2011-12, Workers Urged to Check Eligibility for EITC; IRS and Partners Mark 5th EITC Awareness Day

Affordable Care Act increases transparency for consumers in “mini-med” plans

New rules require insurers to notify consumers if their coverage has lower annual limit; Limits sale of mini-med plans

The Department of Health and Human Services (HHS) today released new guidance that will give consumers more information about their health insurance plan. Under the new rules, health insurers offering “mini-med” plans must notify consumers in plain language that their plan offers extremely limited benefits and direct them to http://www.HealthCare.gov where they can get more information about other coverage options. HHS has also issued guidance restricting the sale of new mini-med plans except under very limited circumstances.

“The Affordable Care Act is giving consumers more control over their health care by providing them with information about their health insurance options”, said Secretary Kathleen Sebelius. “Now, we’re taking an unprecedented step to ensure consumers are informed when they purchase policies that offer limited coverage”.

The Affordable Care Act will end limited-benefit health insurance plans, sometimes called “mini-med” plans, in 2014 and provide Americans with affordable, high-quality coverage options. Unfortunately, today, mini-med plans are often the only type of private insurance available to some workers. In order to protect coverage for these workers, HHS has issued temporary waivers from rules restricting the level of annual limits to some group health plans and health insurance issuers. Waivers only last for one year and are only available if the plan certifies that a waiver is necessary to prevent either a large increase in premiums or a significant decrease in access to coverage.

Guidance issued today ensures that consumers in plans with low annual limits are notified of the quality of their health plan so that they can make informed decisions about whether mini-med coverage is right for them. The supplemental guidance requires health plans with waivers to tell consumers if their health care coverage is subject to an annual dollar limit lower than what is required under the law. Specifically, the notice must include the dollar amount of the annual limit along with a description of the plan benefits to which the limit applies. 

Additional guidance issued today also provides new rules on when mini-med plans can continue to be sold. Under limited circumstances, insurers that have obtained a waiver of the annual limit requirement can sell policies to new employers and individuals. 

The Affordable Care Act bans annual dollar limits beginning in 2014. Until then, annual limits are phased out under HHS regulations published in June 2010. For plan years starting between September 23, 2010 and September 22, 2011, plans may not limit annual coverage of essential health benefits such as hospital, physician and pharmacy benefits to less than $750,000. The restricted annual limit will be $1.25 million for plan years starting on or after September 23, 2011, and $2 million for plan years starting between September 23, 2012 and January 1, 2014.

More information about the new guidance can be found at http://www.healthcare.gov/news/factsheets/increasing_transparency.html. The guidance can be found at http://www.hhs.gov/ociio/regulations/annual_limit_waivers.html.

Citing Conflict with Federal Law, Department of Justice Challenges Arizona Immigration Law


WASHINGTON – The Department of Justice challenged the state of Arizona’s recently passed immigration law, S.B. 1070, in federal court today.  

In a brief filed in the District of Arizona, the Department said S.B. 1070 unconstitutionally interferes with the federal government’s authority to set and enforce immigration policy, explaining that “the Constitution and federal law do not permit the development of a patchwork of state and local immigration policies throughout the country.”  A patchwork of state and local policies would seriously disrupt federal immigration enforcement.  Having enacted its own immigration policy that conflicts with federal immigration law, Arizona “crossed a constitutional line.” 

The Department’s brief said that S.B. 1070 will place significant burdens on federal agencies, diverting their resources away from high-priority targets, such as aliens implicated in terrorism, drug smuggling, and gang activity, and those with criminal records.  The law’s mandates on Arizona law enforcement will also result in the harassment and detention of foreign visitors and legal immigrants, as well as U.S. citizens, who cannot readily prove their lawful status.

In declarations filed with the brief, Arizona law enforcement officials, including the Chiefs of Police of Phoenix and Tucson, said that S.B. 1070 will hamper their ability to effectively police their communities.  The chiefs said that victims of or witnesses to crimes would be less likely to contact or cooperate with law enforcement officials and that implementation of the law would require them to reassign officers from critical areas such as violent crimes, property crimes, and home invasions.

        The Department filed the suit after extensive consultation with Arizona officials, law enforcement officers and groups, and civil rights advocates.  The suit was filed on behalf of the Department of Justice, the Department of Homeland Security, and the Department of State, which share responsibilities in administering federal immigration law.

“Arizonans are understandably frustrated with illegal immigration, and the federal government has a responsibility to comprehensively address those concerns,” Attorney General Holder said.  “But diverting federal resources away from dangerous aliens such as terrorism suspects and aliens with criminal records will impact the entire country’s safety.   Setting immigration policy and enforcing immigration laws is a national responsibility.  Seeking to address the issue through a patchwork of state laws will only create more problems than it solves.”

“With the strong support of state and local law enforcement, I vetoed several similar pieces of legislation as Governor of Arizona because they would have diverted critical law enforcement resources from the most serious threats to public safety and undermined the vital trust between local jurisdictions and the communities they serve,” Department of Homeland Security Secretary Janet Napolitano said.  “We are actively working with members of Congress from both parties to comprehensively reform our immigration system at the federal level because this challenge cannot be solved by a patchwork of inconsistent state laws, of which this is one.  While this bipartisan effort to reform our immigration system progresses, the Department of Homeland Security will continue to enforce the laws on the books by enhancing border security and removing criminal aliens from this country.”

The Department has requested a preliminary injunction to enjoin enforcement of the law, arguing that the law’s operation will cause irreparable harm.

“Arizona impermissibly seeks to regulate immigration by creating an Arizona-specific immigration policy that is expressly designed to rival or supplant that of the federal government.  As such, Arizona’s immigration policy exceeds a state’s role with respect to aliens, interferes with the federal government’s balanced administration of the immigration laws, and critically undermines U.S. foreign policy objectives.  S.B. 1070 does not simply seek to provide legitimate support to the federal government’s immigration policy, but instead creates an unprecedented independent immigration scheme that exceeds constitutional boundaries,” the Department said in its brief.

Download the Supporting Documents:

Complaint Filed (PDF)
Arizona PI Brief (PDF)
Declaration of Daniel Ragsdale (PDF)
Declaration of David Aguilar (PDF)
Declaration of David Palmatier (PDF)
Declaration of Dominick Gentile (PDF)
Declaration of Mariko Silver (PDF)
Declaration of Michael Aytes (PDF)
Declaration of Roberto Villasenor (PDF)
Declaration of Jack Harris
Declaration of Tony Estrada (PDF)

Federal Court Shuts Down Florida Tax Preparer


WASHINGTON – A federal district court in Florida has permanently barred Jacksonville resident Shirley Clark from preparing tax returns for others, the Justice Department announced today. Judge Marcia Morales Howard of the U.S. District Court for the Middle District of Florida entered the permanent injunction against Clark and her firm, Nichet Corp. Clark consented to the injunction, which requires her to turn over her customer list to the Justice Department.

The government in the case alleged that Clark prepared at least 1,250 federal tax returns for her customers from 2004 until 2007 and claimed nearly $750,000 in fraudulent fuel tax credits on those returns. The complaint also alleged that Clark prepared returns that fabricated income and expenses for customers in order to fraudulently maximize the earned income tax credit.

The fuel tax credit is available only to taxpayers who use fuel to operate farm equipment or for other off-highway business uses. The complaint alleged that Clark fraudulently claimed this credit for truck drivers who were not qualified to receive the credit. The complaint also asserted that Clark claimed absurdly large credits by falsely reporting purchases of huge quantities of gasoline; in most cases, the cost of the gasoline was more than the customers’ annual income.

Fuel credit scams are on this year’s IRS list of the Dirty Dozen Tax Scams. In the past few years the Justice Department has obtained injunctions shutting down many tax preparers who claim the phony credits on customers’ returns.

In the past decade, the Justice Department’s Tax Division has obtained more than 465 injunctions against tax fraud promoters and tax return preparers. Information about these cases is available on the Justice Department’s Web site.

Three Ways to Pay Your Federal Income Tax


People who owe taxes but can’t pay the full amount owed by the April deadline should still file their return on time and pay as much as they can to avoid penalties and interest. If you can’t pay the full amount, you should contact the IRS to ask about alternative payment options.  Here are some of the alternative payment options you may want to consider:

  1. Additional Time to Pay Based on your circumstances, you may be granted a short additional time to pay your tax in full. A brief additional amount of time to pay can be requested through the Online Payment Agreement application at IRS.gov or by calling 800-829-1040. Taxpayers who request and are granted an additional 30 to 120 days to pay the tax in full generally will pay less in penalties and interest than if the debt were repaid through an installment agreement over a greater period of time.
  2. Installment Agreement You can apply for an IRS installment agreement using the Web-based Online Payment Agreement application on IRS.gov. This Web-based application allows taxpayers who owe $25,000 or less in combined tax, penalties and interestto self-qualify, apply for, and receive immediate notification of approval. You can also request an installment agreement before your current tax liabilities are actually assessed by using OPA. The OPA option provides you with a simple and convenient way to establish an installment agreement and eliminates the need for personal interaction with IRS and reduces paper processing. You may also complete and submit a Form 9465, make your request in writing, or call 1-800-829-1040 to make your request. For balances over $25,000, you are required to complete a financial statement to determine the monthly payment amount for an installment plan. For more complete information see Tax Topic 202, Tax Payment Options on IRS.gov.
  3. Pay by Credit Card or Debit Card You can charge your taxes on your American Express, MasterCard, Visa or Discover credit cards. Additionally, you can pay by using your debit card. However, the debit card must be a Visa Consumer Debit Card, or a NYCE, Pulse or Star Debit Card. To pay by credit card or debit card, contact one of the service providers at its telephone number or Web site listed below and follow the instructions. There is no IRS fee for credit or debit card payments, but the processing companies charge a convenience fee or flat fee. If you are paying by credit card, the service providers charge a convenience fee based on the amount you are paying. If you are paying by debit card, the service providers charge a flat fee of $3.89 to $3.95.Do not add the convenience fee or flat fee to your tax payment.

The processing companies are:

Official Payments Corporation:
To pay by debit or credit card: 888-UPAY-TAX (888-872-9829),

Link2Gov Corporation:
To pay by debit or credit card: 888-PAY-1040 (888-729-1040),

RBS WorldPay, Inc.
To pay by debit or credit card: 888-9PAY-TAX (888-972-9829),

For more information about filing and paying your taxes, visit IRS.gov and choose 1040 Central or refer to the Form 1040 Instructions or IRS Publication 17, Your Federal Income Tax. You can download forms and publications at IRS.gov or request a free copy by calling 800-TAX-FORM (800-829-3676).