WBK Industry News - Litigation Developments

DOJ Reaches Redlining Settlement with New Jersey Bank

The Department of Justice (DOJ) recently reached a settlement with a New Jersey state-chartered bank over alleged discriminatory redlining lending practices.  The bank allegedly failed to provide mortgage lending services to communities of color in violation of the Fair Housing Act and the Equal Credit Opportunity Act.

The DOJ asserted in its complaint that the bank failed to provide mortgage lending services to communities of color in New Jersey’s Essex, Somerset and Union neighborhoods.  Specifically, the DOJ alleged that the bank did not open branches in these neighborhoods and did not provide sufficient marketing or outreach to inform communities of color that mortgage lending services were available.  The DOJ alleged that these actions resulted in the bank including only a small fraction of the communities of color in its Community Reinvestment Act (CRA) assessment area.

Under the Consent Order, the bank agreed to comply with four remedial measures:

  • invest at least $12 million in a loan subsidy fund for residents in the affected communities; invest $750,000 for advertising, outreach, and consumer education; and invest $400,000 toward developing community partnerships to provide services that increase access to residential mortgage credit for the affected communities;
  • open two new branches in majority non-white neighborhoods and with at least four mortgage loan officers dedicates to serving neighborhoods in the affected communities;
  • hire a full-time community development officer to oversee lending in majority-nonwhite neighborhoods, and
  • maintain an expanded CRA assessment area that includes the affected communities in New Jersey’s Essex, Somerset and Union counties.

The bank neither admitted nor denied the DOJ’s allegations.