A mortgage lender that allegedly discriminated against minorities by refusing to make loans on row houses valued at less than $100,000 has agreed to end the practice and pay a non-profit group $500,000.

Atlanta-based SouthStar Funding LLC’s lending policies discriminated against African Americans and Hispanics because row houses valued at less than $100,000 are more heavily concentrated in minority neighborhoods, the National Community Reinvestment Coalition alleged. SouthStar was also accused of refusing to back loans on any row houses in Baltimore, where about two-thirds of row houses are located in African American and Hispanic neighborhoods.

The U.S. Department of Housing and Urban Development investigated NCRC’s complaint and negotiated a settlement with SouthStar.

SouthStar agreed to stop excluding borrowers on the basis of property type or minimum property value, and to apply underwriting guidelines used for townhomes and condos to loans secured by row homes. SouthStar will also conduct second reviews of denied loans to ensure that applications are processed without discrimination, and advertise its loan products to media targeted to African American and Hispanic communities.

SouthStar agreed to pay NCRC $500,000 over four years, which will help fund anti-discrimination efforts, including training seminars for housing counselors who serve people who have had difficulty getting loans. NCRC is a coalition of 640 nonprofit organizations that promotes the investment of private capital in underserved communities.

Show Comments Hide Comments

Comments

Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Success!
Thank you for subscribing to Morning Headlines.
Back to top
TODAY ONLY: Lock in a full year of monthly digital events to keep you at the top of your game.Register now×
Cyber Week Sale: Get 1 year of Inman Select for $75.SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription