Honda Lending Discrimination Case Settled
TORRANCE On July 14, the Department of Justice and the Consumer Financial Protection Bureau announced the settlement to resolve lending discrimination allegations against American Honda Finance.
The allegations state that Honda, based in Torrance, engaged in discrimination against African American, Latino and Asian American borrowers in auto lending.
Honda has agreed to change the way it prices its loans by limiting dealer markup to 125 basis points (or 1.25 percentage points) for loans of 60 months or less, and to 100 basis points (or 1 percentage point) for loans greater than 60 months. The settlement also provides $24 million in compensation for alleged victims of past discrimination.
The coordinated investigations by the department and the Consumer Financial Protection Bureau that preceded the settlement determined this system of subjective and unguided pricing discretion directly results in Honda’s qualified African-American, Hispanic and Asian/Pacific Islander borrowers paying more than qualified non-Hispanic white borrowers. The department and the bureau anticipate that Honda’s new caps on discretionary markups will substantially reduce or eliminate these disparities.
Honda is known as an “indirect” auto lender because, rather than taking applications directly from consumers, the company makes most of its loans through car dealers nationwide who help their customers pay for their new or used car by submitting their loan application to Honda. Honda’s business practice, like most other major auto lenders, allows car dealers discretion to vary a loan’s interest rate from the price Honda initially sets based on the borrower’s objective credit-related factors. Dealers receive greater payments from Honda on loans that include a higher interest rate markup.
The settlement resolves claims by the department and the Consumer Financial Protection Bureau that Honda discriminated by charging thousands of African-American, Hispanic and Asian/Pacific Islander borrowers higher interest rates than non-Hispanic white borrowers. The agencies claim that Honda charged borrowers higher interest rates because of their race or national origin and not because of the borrowers’ creditworthiness or other objective criteria related to borrower risk. The United States’ complaint alleges that the average African-American victim was obligated to pay more than $250 more during the term of the loan because of discrimination, the average Hispanic victim was obligated to pay more than $200 more during the term of the loan because of discrimination and the average Asian/Pacific Islander victim was obligated to pay more than $150 more during the term of the loan because of discrimination. The Equal Credit Opportunity Act (ECOA) prohibits such discrimination in all forms of lending, including auto lending. Honda resolved the bureau claims by entering into a public administrative settlement.
In addition to the $24 million in payments for its past conduct, under the Justice Department consent order, Honda will also pay $1 million to fund a consumer financial education program focused on consumer auto finance that is designed to benefit African-American, Hispanic and Asian/Pacific Islander populations.
The settlement also requires Honda to improve its monitoring and compliance systems. The settlement allows the lender to experiment with different approaches toward lessening discrimination and requires it to regularly report to the department and the bureau on the results of its efforts as well as discuss potential ways to improve results.
The settlement provides for an administrator to locate victims and distribute payments of compensation at no cost to borrowers whom the department and the Consumer Financial Protection Bureau identify as victims of Honda’s discrimination. The department and the bureau will make a public announcement and post information on their websites once more details about the compensation process become available. Borrowers who are eligible for compensation from the settlement will be contacted by the administrator, and do not need to contact the department or the bureau at this time.
The settlements in these matters provide for a total of at least $1.2 billion in monetary relief for impacted communities.
Man Suspected of Killing Roommate Arrested
LONG BEACH — On July 10, Norman Mathew Perdon was arrested in connection with the stabbing and murder of his former roommate Allen Estes, 38.
The incident took place July 4. Long Beach Police Department officers found Estes at about 5:30 a.m. near Anaheim and Dawson Avenue. Estes had sustained several stabbing injuries and was pronounced dead at the scene.
A tip helped police find Perdon. He was arrested at the 1400 block of Walnut Avenue. Charges have been filed against him and detectives presented the case to the Los Angeles County District Attorney’s Office on July 14. He is being held at the Long Beach Jail where his bail has been set at $1.02 million.
POLB Names Managing Director of Communications
LONG BEACH — On July 14, former chief communications officer of Metro Los Angeles, Noelia Rodriguez, was selected by the Long Beach Board of Harbor Commissioners to be the new managing director of communications, government relations and marketing divisions.
Rodriguez’s experience ranges from the White House and Los Angeles Mayor’s Office to Metro Los Angeles.
As Metro’s chief communications officer, Rodriguez led 275 employees and managed a $50 million budget overseeing media relations, government relations, marketing, communications and community relations. She was also responsible for customer programs and services.
She previously served as director of the John F. Kennedy Jr. Forum at Harvard University, vice president of corporate communications at Univision, director of communications and press secretary to First Lady Laura Bush from 2001 to 2003 and deputy mayor under former Los Angeles Mayor Richard Riordan. In 2000, Riordan appointed Rodriguez to serve as president and CEO of LA 2000, the host committee for the Democratic National Convention, Los Angeles’ first political convention since President Kennedy’s nomination in 1960.
Rodriguez’s expertise is expected to further enhance the Harbor Department’s award-winning advocacy and communications efforts.
Rodriguez earned a bachelor’s degree in business administration from California State University Los Angeles. She also completed one year of studies in the social ecology program at University of California Irvine.