Court Denies DOJ’s Request for Early Termination of “Modern” Redlining Consent Order

A New Jersey federal court denied a motion by the DOJ requesting early termination of a “modern” redlining consent order entered under the prior administration.

In 2022, the DOJ entered into a consent order with a New Jersey state-chartered bank for allegedly failing to provide mortgage loans and related services, and discouraging prospective borrowers from applying for credit, in majority-Black and Hispanic neighborhoods in the Newark, NJ area.  Among other things, the bank was required to create a $12 million loan subsidy fund to help borrowers in the affected areas, as well as spending approximately $1.15 million over the life of the consent order on advertising, marketing, outreach, and community partnerships directed towards the affected areas.  The company also agreed to various changes to its business practices and fair lending compliance program.  The consent order was to remain in effect for 5 years (until September 2027).

In May 2025, the DOJ moved for the court to terminate the consent order early, asserting that the bank had demonstrated a commitment to fair lending and had reached substantial compliance with the monetary and injunctive terms of the consent order.  Several fair lending and housing advocacy groups submitted amicus briefs urging the court not to terminate the consent order early.

The court has now denied the DOJ’s motion, finding that the DOJ has not shown that there has been a significant change in conditions or circumstances which would warrant vacating the prior final order.  The court found that even though the bank may have remained in compliance with the consent order to date, the fact that the consent order required the bank to take various actions annually or continuously for a 5-year period inherently meant that the bank could not yet have substantially complied with the consent order.  The court also noted that the bank had only disbursed about 65% of the $12 million loan subsidy fund so far, such that it still had to disburse the remaining 35%.  The bank’s stated commitment to fair lending compliance going forward did not equate to the bank having substantially performed all of its obligations under the consent order and did not warrant early termination of the consent order.

This decision follows several other cases where courts rejected requests from the DOJ and the CFPB to terminate other “modern” redlining consent orders after advocacy groups challenged the requests (as previously discussed here and here).