The fair housing law, according to the federal Department of Housing and Urban Development, prohibits lenders from denying a mortgage loan, adding conditions, or charging higher payments "based on race, color, national origin, religion, sex, familial status, or handicap."
According to Beneficial's statement to shareholders, "the investigation results from a referral by the Federal Deposit Insurance Corp., the bank's primary federal regulator, and focuses on the bank's origination of home equity and residential mortgage loans."
Beneficial said it is cooperating with the investigation but added that it will be unable to do any "strategic expansion" or finish converting from its shareholder-owned "mutual" structure to a fully investor-owned structure until the investigation is over.
"The effects of a U.S. Department of Justice investigation will impede the company's results," wrote analyst David C. Peppard in a report to clients of Janney Capital Markets of Philadelphia. He has stopped recommending that customers buy the stock and cut his rating to "neutral" until the government decides what it's going to do.
"Without knowing the specifics, we would guess that an investigation of this scope could take upward of a year to 18 months," wrote Frank Schiraldi at Sandler O'Neill & Partners L.P. of New York.
Contact Joseph N. DiStefano at firstname.lastname@example.org or 215-313-3124.