Federal Agency Goes After Small Mortgage Company For What They Deemed Offensive Remarks

Credit: shutterstock

The federal government is trying to overstep its boundaries once again according to a report by the Washington Free Beacon. Upon deeming that a small mortgage company, Townstone Financial, acted in violation of civil rights law, the Consumer Financial Protection Bureau is continuing to fight for a lawsuit against the Chicago-based company which has less than ten employees. Citing what the bureau deemed offensive statements made by employees of the company on podcasts, and the bureau’s fervor in finding additional violations, the federal agency is desperate to see this case all the way to the Supreme Court if necessary. 

According to the Free Beacon, the agency said the small company may have violated their rule that prohibits lenders from “making statements that ‘discourage’ minorities from applying for loans.” Referencing the high crime in South Chicago and recommending that home sellers “take down the Confederate flag,” the agency argued that such words could “scare off black applicants.” 


In response, Townstone hired a consumer testing firm, Kleimann Communication Group, to see if the remarks did offend and “alienate” black applicants. The Free Beacon reports that “the results were reassuring: Not a single black Chicagoan interviewed by the firm found the radio segments offensive, according to a copy of the firm’s report obtained by the Washington Free Beacon. Some even said they were more inclined to use Townstone for mortgages after hearing its employees’ banter, which they found funny and relatable. But in July 2020—two months after the death of George Floyd—the bureau sued Townstone anyway.”

The district court dismissed the case citing separation of powers, and the Judge presiding over the case said that “the bureau, an Executive Branch agency, had ignored the clear meaning of a congressionally enacted law.” Despite this, the agency appealed, and is still pursuing a lawsuit following the Equal Credit Opportunity Act “arguing that the lender could be guilty of discrimination even if it had not discriminated against anyone who had applied for credit.”


This case is the first time the agency, set up in 2020 by Elizabeth Warren, is going after a small company that could not afford a multi-million dollar payout. The agency’s appeal to a higher court comes at the same time the bureau is being evaluated by the Supreme Court in which its purpose will be reviewed. 

Recommended For You