American Banker, February 6, 2023, CFPB redlining lawsuit against nonbank mortgage lender gets dismissed
A federal judge has dismissed a redlining lawsuit filed by the Consumer Financial Protection Bureau against a Chicago mortgage lender, rejecting the bureau’s argument that a key anti-discrimination law protects prospective borrowers.
On Friday, Judge Franklin U. Valderrama of the U.S. District Court for the Northern District of Illinois ruled that the CFPB’s suit against Townstone Financial was invalid because the Equal Credit Opportunity Act applies only to home loan applicants, not to potential applicants. The distinction is important because it could limit the CFPB’s authority to file redlining cases, experts said.
