HomesThe U.S. Justice Department has sued GFI Mortgage Bankers Inc., alleging that the New York-based lender discriminates against Hispanic and African-American customers.

The U.S. Attorney’s office for Manhattan filed a lawsuit in early April charging that GFI Mortgage exhibited a pattern of racial and ethnic discrimination in hundreds of loans originated between 2005 and 2009.

GFI Mortgage has 13 branches licensed in seven states, according to documents filed by Preet Bharara, the U.S. Attorney for the Southern District of New York. GFI Mortgage says on its website that it has loaned more than $1 billion in mortgages.

Bharar’s office claims that GFI Mortgage jacked up fees and increased the interest rates it offers in order to make home loans more expensive for African Americans and Hispanics.

African Americans who borrowed money from GFI Mortgage in 2007 paid $7,500 more over the next four years than did similar white clients, according to the lawsuit. Similarly, the suit alleges that Hispanic customers were charged $5,600 more than white customers during the first four years of their mortgage.

Court records allege that at the same time, GFI Mortgage engaged in extraordinary efforts to increase its revenue from home mortgages. Incentives rewarding loan officers with a portion of the profits generated by each loan encouraged the officers to charge as much as possible for mortgages.

Consequently, between 2005 and 2009, GFI Mortgage went from issuing 974 loans in a year to originating 2,270 annually. Simultaneously, its revenue from mortgages more than doubled, leaping to $768 million from $305 million in four years.

Bharara’s office wants the courts to determine that GFI Mortgage engaged in illegal practices and to order the lender to stop discriminating on the basis of race and ethnicity. Prosecutors are also seeking compensatory damages for victims and other civil penalties.

Read more at Bloomberg.com