Calling it a “harassment saga,” the consumer financial protection agency moved March 26 to vacate a 2024 settlement reached between it and a firm it previously alleged had violated the Equal Credit Opportunity Act and its regulation B.
The Consumer Financial Protection Bureau (CFPB) said it wanted to vacate the settlement it reached with Townstone Financial Inc. The agency said it was seeking to “right a wrong” against the firm.
In 2020, the CFPB sued the firm alleging redlining. Although a federal district court had previously dismissed the case against Townstone, last year the Seventh Circuit Court of Appeals reversed that decision, finding in favor of the bureau that expanded the Equal Credit Opportunity Act (ECOA) to include protections for prospective applicants who may be discouraged from applying for credit.
The bureau had accused Townstone of discouraging prospective African American applicants from applying for mortgages in the Chicago metropolitan area through derogatory statements made in podcasts and radio shows, according to reports. Following the appeals court decision, CFPB reached a settlement with Townstone, requiring the firm to pay a $105,000 penalty to the CFPB’s victims relief fund.
Now, however, the CFPB (under Acting Director Russell Vought) is calling the settlement harassment. It alleged in a release March 26 that the agency used a “redlining screen” based on an arbitrary number of mortgages, and set out to “destroy a small Midwest firm with about 10 employees and a radio program called Townstone Financial.”
“After a thorough review, the CFPB is seeking to make Townstone whole by returning the six-figure penalty they were forced to pay,” CFPB said