Relman Colfax would like to congratulate the Consumer Financial Protection Bureau (CFPB) for its landmark victory in CFPB v. Townstone Financial, Inc, a lending discrimination case challenging Townstone’s practice of redlining Black neighborhoods in Chicago by actively discouraging credit applications from those areas. The U.S. Court of Appeals for the Seventh Circuit ruled in favor of the CFPB on July 11, 2024. This monumental decision upholds core anti-discrimination protections that have been in place for nearly 50 years.
A Chicago district court erroneously dismissed the CFPB’s claims, holding that the Equal Credit Opportunity Act (ECOA) and its implementing regulations do not reach any pre-application discriminatory conduct, including statements that would discourage or prevent consumers from applying for credit at all. On appeal, Relman Colfax filed an amicus brief on behalf of the National Fair Housing Alliance (NFHA) and various other civil rights, fair housing, and consumer protection organizations in support of the Consumer Financial Protection Bureau (CFPB) in CFPB v. Townstone Financial, Inc.
In a unanimous opinion, the Seventh Circuit panel reversed the district court, upholding the longstanding interpretation that ECOA prohibits discriminatory discouraging prospective applicants. The district court’s contrary position would have had significant consequences for communities affected by redlining and other forms of credit discrimination, which have fueled a racial wealth gap and disproportionately low rates of homeownership among Black and Latino households.
We extend our gratitude to all those who stood on the frontlines defending anti-discrimination protections. This includes NFHA, the American Civil Liberties Union, Lawyers’ Committee for Civil Rights Under Law, National Consumer Law Center, Chicago Lawyers’ Committee for Civil Rights, South Suburban Housing Center, Fair Housing Center of Central Indiana, HOPE Fair Housing Center, Open Communities, Metropolitan Milwaukee Fair Housing Council, and American Civil Liberties Union of Illinois.
The amicus brief can be found here.
The Relman Colfax case team is led by Stephen Hayes and Valerie Comenencia Ortiz, with assistance from our former paralegal Mariana Boully Perez.