Robert Maddox Quoted on Redlining Case in Chicago by Arch Mortgage Insurance

Partner Robert Maddox was quoted in an Arch Mortgage Insurance newsletter on a high-profile case against Townstone Financial, a nonbank home lender in Chicago, for violating the Equal Credit Opportunity Act (ECOA) and its implementing regulation.

The CFPB alleged that Townstone had violated the ECOA because the lender drew almost no applications for properties in predominantly African American neighborhoods, engaged in discriminatory acts to discourage black applicants from applying for loans, and discouraged prospective applicants in other areas from applying for mortgage loans on properties located in these communities.

Maddox pointed out that it is difficult to dispute these allegations, referring to comments made by loan officers on the Townstone’s radio show. “They spoke of the Southside of Chicago as someplace you don’t slow down. A ‘war zone.’ … You can see it’s not too hard to say they’re not focused on growing African American applicants,” said Maddox.

Despite these allegations, the U.S. District Court for the Northern District of Illinois ruled in favor of Townstone.

The full newsletter, Capital Commentary, was published by Arch Mortgage Insurance on September 5, 2023.