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ARTICLE · 25 FEBRUARY 2025

Second Circuit Upholds Reverse Redlining Verdict Against Mortgage Lender

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On February 14, a divided Second Circuit panel upheld a 2016 jury verdict which found that a mortgage lender violated, among other laws, the Equal Credit Opportunity Act ("ECOA")...

United StatesFinance and Banking
A.J. Dhaliwal
A.J. Dhaliwal
Mehul Madia
Mehul Madia
Brandon Mohamad
Brandon Mohamad
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On February 14, a divided Second Circuit panel upheld a 2016 jury verdict which found that a mortgage lender violated, among other laws, the Equal Credit Opportunity Act ("ECOA") by engaging in "reverse redlining" when it allegedly targeted Black and Latino homeowners with predatory loans.

The majority held that the district court did not abuse its discretion by applying equitable tolling to the plaintiff's claims, and rejected the mortgage lender's argument that the statute of limitations began running at loan origination. Instead, the statute of limitations began to run when the plaintiffs discovered that they were the alleged victims of discrimination in connection with their predatory loans.

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