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WBK Industry News - Federal Regulatory Developments

Ohio Banks Settle DOJ Redlining Case in Consent Order Requiring $9 Million Bank Investment in Affected Communities

Following a fair housing investigation and the filing of a complaint in federal district court, the DOJ recently obtained a consent order against two Ohio-based banks for “redlining” practices in predominantly African American communities in Ohio and Indiana.  The consent order requires the banks to make a total investment of $9 million to improve the credit services available to African Americans in the affected communities.

Redlining is the denial or avoidance of providing access to credit and other loan services to consumers based on the racial demographics of the areas in which they live.  The Ohio banks, which share common ownership and management, engaged in discriminatory practices in several metropolitan areas from 2010 to 2014, according to the DOJ’s investigation and complaint.

Specifically, the DOJ alleged the banks violated both the Fair Housing Act and the Equal Credit Opportunity Act with regard to mortgage lending practices.  The DOJ focused on the loan services provided by the banks in light of racial demographics and residential housing patterns in Cincinnati, Columbus, and Dayton, OH, and Indianapolis, IN.  According to the DOJ, violations of the law were evident from the banks’ practice of extending credit to a “significantly greater extent” and thus better serving the credit needs of white residents over African American residents in those metropolitan areas.

The consent order requires the banks to increase their mortgage lending activities and access to credit in underserved African American communities with a $9 million investment that includes $7 million in loan subsidies and $2 million for advertising, community outreach, and financial education efforts.  The banks will also invest in new branches and loan production offices in African American neighborhoods.  According to the DOJ media statement, the consent order and the banks’ investments are aimed at increasing the volume of mortgage loans offered while also “driving economic activity and creating a level playing field for qualified borrowers.”