The owner of a small Chicago mortgage company battling the Consumer Financial Protection Bureau (CFPB) said he was “shocked” when the bureau targeted his firm for redlining.
Barry Sturner, owner of Townstone Financial, along with two of his attorneys, Richard Horn of Garris Horn LLP and Sean Burke of Mattingly Burke Cohen & Biederman LLP, spoke exclusively to RESPA News about his case. He’s also represented by Marx Sterbcow of The Sterbcow Law Group LLC.
The bureau filed a lawsuit against Townstone Financial in July for alleged violations of the Equal Credit Opportunity Act (ECOA) and redlining. The company is charged with making statements during marketing ventures, including weekly radio shows and podcasts, that allegedly illegally discouraged prospective African American applicants from applying to the company for mortgage loans.
Also see: A year later, CFPB cites Townstone for ECOA violations
Townstone recently filed a motion to dismiss the suit in U.S. District Court for the Northern District of Illinois. Friends of the company also have launched a website, through which they are appealing to others to help finance its defense.
Sturner, a married father of two, has been in business since 2002.
“We were completely shocked they filed on us for things [we] said on the radio and on our podcast,” Sturner said. “Our radio show and our podcast – we had three guys on there – myself and two of my loan officers. We had two Republicans on there, including myself, and the other guy was a Democrat.”
“Through the five years we were on the radio, we would go back and forth talking about everything under the sun. We’d talk about local and national politics, food, the election, Star Wars, and crime,” he continued. “To talk about mortgages for an hour? We would have put people to sleep to be honest with you. That’s why [the enforcement action] should be dismissed. We were mostly talking about politics and current events on the show.”
Sturner said publicity surrounding the investigation has hurt his reputation.
“Following the law has always been important to me. And then all of a sudden, they’re making these things up. I don’t know where it says that you can’t talk about current events and I can’t talk about the fact that I live in the south loop of Chicago and there’s a lot of crime around here,” Sturner said. “I advertised on the largest AM radio stations in Chicago. We have a limited budget. It’s got to hit the broadest demographics around. The radio stations we advertise on go from conservative all the way to liberal. The whole case basically centers on us redlining and not wanting to do business with a certain group of people, which is just the opposite of our marketing plan, which is to spend what little money we have to hit the greatest amount of people.”
Sturner rejected the notion his actions have been motivated by race.
“I have been in this business since 1998,” he said. “I don’t make any money unless I do loans for everybody. We advertise to the masses, and we basically wait for the masses to call us up.”
Sturner said in response to the CFPB’s allegation that not having an African American loan officer is discriminatory under ECOA that he recalls that 29 of his 82 employees throughout the years have been minorities, including nine African Americans. He said he has never had a complaint filed against him for anything relating to redlining.
Townstone stopped the radio show 18 months ago, but still does an occasional podcast.
He said he first retained Horn nearly five years ago to make sure he was compliant with the TRID rule (Horn is the former senior CFPB official who led the original TRID rule).
“Anybody who seeks out a specific attorney for compliance purposes shows they are interested in compliance, that’s just a fact,” Horn said. “Barry is not somebody who is flouting compliance and trying to skirt the law. But neither ECOA nor Regulation B contain the affirmative requirements that the CFPB is alleging exist for creditors under ECOA, that you have to purchase marketing targeted to specific demographics, comply with a demographic hiring quote, etc. Someone who is interested in compliance still can’t comply with unwritten rules.”
Sturner said his battle with the CFPB is exacting a financial toll.
“This unfortunately is on my mind in the morning and when I go to sleep at night since this started four years ago,” he said. “It’s been a freaking nightmare for me. The discussions we’ve had with the Consumer Financial Protection Bureau have been outrageous. We’ve gotten nowhere with them. I don’t know how long we’ll be able to do this. We’re trying to raise money to fight these guys. The bottom line for me is, I don’t want this happening to anybody else. I don’t want the government to be able to go after people for the content of their political speech. Other people have to understand, once they go after the tiny company like us, and they take us out, they’re going to be next. I need help. I’m running out of funds and energy.”
“I would like to fight this to the end,” Sturner said. “But it comes down to funding.”
If the CFPB is successful in its lawsuit against Townstone, Burke said it would create a damaging precedent.
“These regulations don’t give people adequate notice in understanding what type of behavior is prohibited and mandated,” Burke said. “If this becomes the law, it creates a situation that is inconsistent with the bureau’s directive, ECOA’s directive and the First Amendment. It’s Barry now. It may be you next.”