DOJ Reaches Settlement with Regional Bank Over Redlining Allegations

DOJ  •  ECOA  •  Mortgage

DOJ_250x170On September 29, 2015, the DOJ announced that it had entered into a consent order with a regional bank over allegations that it engaged in redlining practices in violation of the Equal Credit Opportunity Act (ECOA). The bank holds over $900 million in assets and offers traditional deposit accounts, mortgage loans, and other banking products. It has twelve full-service branches and five partial-service branches.  The investigation began when a regional equal housing organization alerted the FDIC that the bank allegedly violated the ECOA by engaging in discriminatory lending practices. After the FDIC completed its investigation and found potential evidence of wrongdoing, it referred the matter to the DOJ.

According to the DOJ’s complaint, the bank discriminated against minorities by systematically preventing residents of certain minority neighborhoods from obtaining mortgage loans. The bank allegedly placed most of its branches and loan officers outside of minority neighborhoods, excluded minority neighborhoods from the bank’s Community Reinvestment Act assessment area and other low income loan programs, and failed to market its credit services to minority populations. Under the proposed consent order,​ which still requires court approval, the bank has agreed to the following: (1) open two new locations in minority neighborhoods; (2) invest $975,000 to provide credit opportunities to minority populations; and (3) conduct fair lending training for employees. The bank did not admit to any wrongdoing as part of the settlement. The DOJ has settled two redlining cases in the past week. Four days before this announcement, the DOJ and CFPB jointly announced a settlement in a similar redlining case.

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