First Alliance Agrees to Pay $436,000 to Settle Bias Suit

First Alliance Mortgage Corp., an Orange-based mortgage broker, has agreed to pay $436,000 to settle a California Department of Corporations lawsuit that accused the firm of racial discrimination in its lending practices.

Without admitting any wrongdoing, First Alliance also agreed to abide by the Holden Act--which prohibits discrimination by lenders on the basis of race or neighborhood, a practice commonly known as redlining--and to institute sensitivity training programs for key employees.

The Department of Corporations suit, filed in August, was the first prosecution ever for violations of the Holden Act. It accused First Alliance of systematically refusing to make loans in some black neighborhoods and of granting less favorable terms to applicants in neighborhoods more than 30% black.

The settlement requires First Alliance to pay $210,000 to the state for the costs of pursuing the suit, $148,000 to NHS Foundation of Oakland (a low income housing organization) and $78,000 to the National Conference of Christians and Jews for sensitivity training.