## Facts

- Mary L. Cartwright, a Black female homeowner, previously obtained a first mortgage (1965) and a second mortgage (1977) from American Savings & Loan Association on her Hammond, Indiana residence.
- In July 1980, Mary and her then-husband purchased urban-renewal lots in East Hammond, a predominantly Black, lower-income neighborhood, conditioned on building a single-family home.
- On August 28, 1980, they applied to American Savings for a $90,000 construction mortgage loan, estimating the completed home’s value at about $91,250.
- A loan officer ordered credit and an appraisal; the appraisal process reportedly lacked comparable single-family sales in the area to support the valuation.
- The lender’s officer testified he asked Cartwright for comparable-sales information needed to proceed, and that the application was not submitted to the loan committee because the file remained incomplete; Cartwright denied being asked for such information and alleged discriminatory handling.
- About six months after the application, Mary and her husband divorced; she later discussed financing with the same officer in 1982 but did not submit a new application and ultimately obtained financing elsewhere.
- Cartwright and a fair-housing organization sued, alleging race and sex discrimination and neighborhood-based lending discrimination (“redlining”), invoking the Fair Housing Act (FHA), Equal Credit Opportunity Act (ECOA), and 42 U.S.C. §§ 1981 and 1982.

## Issues

1. Whether the lender intentionally discriminated against Cartwright on the basis of race or sex in connection with the 1980 construction-loan application under the FHA, ECOA, and 42 U.S.C. §§ 1981 and 1982.
2. Whether the lender engaged in unlawful redlining in the East Hammond urban-renewal area under the FHA.
3. Whether leaving the 1980 application unsubmitted and unresolved constituted an ECOA “adverse action” (a credit denial or similar actionable event).

## Decision

- The Seventh Circuit affirmed the district court’s involuntary dismissal under Federal Rule of Civil Procedure 41(b) after a bench trial.
- The court held plaintiffs failed to prove intentional race or sex discrimination.
- The court held plaintiffs failed to prove unlawful redlining in the relevant neighborhood.
- The court held there was no ECOA “adverse action” because the application was not completed and therefore was not presented for approval or denial.

## Legal Principles

- A plaintiff alleging discriminatory credit treatment under the FHA, ECOA, or §§ 1981–1982 must prove discriminatory intent or otherwise show that the challenged conduct was because of a protected characteristic; disbelief of a lender’s explanation is insufficient absent proof.
- Under ECOA, liability generally requires an “adverse action” (such as denial or revocation of credit); a lender’s non-decision on an incomplete application may not qualify as adverse action.
- FHA redlining claims require contextual proof that a lender systematically treats applications from minority neighborhoods worse than comparable applications elsewhere; statistics lacking application-volume and approval/denial context may be insufficient.
- The FHA and ECOA permit lenders to rely on legitimate, non-discriminatory underwriting concerns, including inadequate comparable-sales data and reasonable collateral-valuation risk, so long as those concerns are genuine rather than pretext.

## Conclusion

The Seventh Circuit upheld dismissal of all claims, concluding that the lender’s handling of the construction-loan request reflected an incomplete application and supported underwriting concerns, and that the plaintiffs’ proof did not show intentional discrimination, ECOA adverse action, or a redlining pattern under the FHA.


Cartwright v. Am. Sav. & Loan Ass’n, 880 F.2d 912 (7th Cir. 1989)