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Mortgage Brokerage Responds to CFPB’s Claims

Updated July 17, 2020

The Chicago-based mortgage brokerage Townstone Financial Inc. is accusing the Consumer Financial Protection Bureau (CFPB) of political motivations in filing a lawsuit that alleged the company conducted redlining practices against African Americans between 2014 and 2017.

The CFPB charged Townstone with violating the Equal Credit Opportunity Act (ECOA) and Regulation B, its implementing regulation, and with the Consumer Financial Protection Act for allegedly drawing almost no mortgage applications in the predominantly African American neighborhoods in the Chicago-Naperville-Elgin metro area and few applications from African Americans throughout the wider Chicago metro market. In its complaint, the CFPB claimed Townstone used its weekly radio shows and podcasts intentionally discouraged African Americans from making mortgage applications and from both living and seeking properties in predominantly African American communities.

James Bopp Jr., co-counsel for Townstone and founder of The Bopp Law Firm of Terre Haute, Indiana, issued a statement on behalf of the company that defined the CFPB as “the controversial brainchild of Senator Elizabeth Warren” and argued the agency was targeted because of its broadcasting on an AM radio station that featured conservative talk shows.

“The CFPB is using this case to drive all banking and mortgage companies away from advertising on conservative talk radio and to punish mainstream conservative political speech and social commentary,” Bopp said. “The CFPB has long been controversial and just lost a case in the United States Supreme Court for being improperly structured. They have been waiting years to file a case on the eve of a Presidential election to damage conservative voices. This is another federal agency weaponized to attack conservatives that needs to be stopped.”

Bopp stated the CFPB began its investigation of Townstone in June 2017 and referred the matter to the Housing & Civil Enforcement Section of the U.S. Department of Justice, which opted not to pursue it. He noted the CFPB’s allegation that Townstone did not reach out to minority communities in the Chicago metro was illogical because the company “decided to advertise on AM radio specifically to reach as broad a geographic area as possible,” adding that Townstone had also advertised in the past on FM radio station that played hip-hop music.

“Townstone has been in business since July 2002 and has not received any fair lending complaints in its entire history 18-year history,” Bopp continued. “And despite the hundreds of thousands of Townstone’s emails and other documents, the CFPB has not cited one with any racial slurs and other potentially offensive terminology in its Complaint.”

Bopp also pointed to Townstone’s one-hour show on AM radio and its podcast that included a mix of real estate discussions and observations on local politics, stressing that different political viewpoints were always part of the program. He accused the CFPB of taking the contents of shows regarding Chicago’s crime-heavy neighborhoods out of context.

“The comments are fact-based, citing facts about societal problems in the South Side of Chicago area with violence and the lack of adequate grocery stores,” Bopp said, adding that the CFPB also found fault in a remark made by a former Townstone co-owner in a June 2015 program related to the removal of a Confederate flag. “The CFPB is struggling so hard to find evidence of discrimination that they have reached back over five years to quote two statements made by a former-owner, and not by anyone currently at Townstone.”

The (CFPB) filed a lawsuit against Townstone Financial Inc. for alleged discriminatory lending practices in the years between 2014 and 2017.

The CFPB charged Townstone with violating the Equal Credit Opportunity Act (ECOA) and Regulation B, its implementing regulation, for allegedly drawing almost no mortgage applications in the predominantly African American neighborhoods in the Chicago-Naperville-Elgin metro area and few applications from African Americans throughout the wider Chicago metro market. In its complaint, the CFPB claimed Townstone used its weekly radio shows and podcasts intentionally discouraged African Americans from making mortgage applications and from both living and seeking properties in predominantly African American communities.

Townstone is also accused by the CFPB of violating the Consumer Financial Protection Act as a result of its allegedly discriminatory lending practices.

The CFPB’s complaint seeks an injunction against Townstone, as well as damages, redress to consumers, and the imposition of a civil money penalty. In announcing its lawsuit, the CFPB stated that its complaint is not a finding or ruling that Townstone has violated the law.

About Author: Phil Hall

Phil Hall is a former United Nations-based reporter for Fairchild Broadcast News, the author of nine books, the host of the award-winning SoundCloud podcast "The Online Movie Show," co-host of the award-winning WAPJ-FM talk show "Nutmeg Chatter" and a writer with credits in The New York Times, New York Daily News, Hartford Courant, Wired, The Hill's Congress Blog and Profit Confidential. His real estate finance writing has been published in the ABA Banking Journal, Secondary Marketing Executive, Servicing Management, MortgageOrb, Progress in Lending, National Mortgage Professional, Mortgage Professional America, Canadian Mortgage Professional, Mortgage Professional News, Mortgage Broker News and HousingWire.
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