First Credit Union to Pay $6.5M – DOJ Redlining Settlement
Written by: Bill Dolan, CMB, AMP
The DOJ has reached redlining-related settlements with 13 banks since launching its anti-discrimination initiative in 2021, but this current agreement this past week makes the first with a credit union.
Citadel Federal Credit Union out of Exton, PA has agreed to pay approximately $6.52 million to resolve allegations that it failed to provide mortgage lending services to majority – Black and Hispanic communities in Philadelphia as well as several nearby counties between 2017 and 2021.
As part of the settlement, the credit union has agreed to open 3 branches in predominantly Black and Hispanic neighborhoods of Philadelphia and hire a community lending officer to oversee lending practices in the city’s communities of color. The Justice Department determined that the credit union discouraged people of color from seeking credit to obtain home loans while their peer lenders generated mortgage applications and mortgage loans roughly 3 times that of Citadel’s rate.
Furthermore, the settlement requires the credit union provide $6 million in mortgage loan subsidies over 5 years for majority Black and Hispanic census tracts in Philadelphia County. It also agreed to pay $270,000.00 toward focused marketing, consumer financial education, and outreach along with an additional $250,000.00 in community development partnerships.
So, what does your Fair Lending program look like today? How effective is your HMDA compliance management system? How effective are your best practices for HMDA data scrubbing?
It is imperative these days that you effectively manage and mitigate risk in these areas and it is critical that your fair lending compliance program is both trustworthy and reliable before your next fair lending examination is assessed by your regulator. Avoiding costly resubmission expenses and civil monetary penalties by building a better HMDA data foundation is key!
At SCA, industry-leading compliance consultants along with our HMDA data analytics team will provide you with a step-by-step guided process which will generate a submission-ready HMDA LAR using your current LOS system or other vendor application.
Contact Bill Dolan, Director, at: Wdolan@scapartnering.com or at: (617) 694-2617 to connect with us or visit our Solutions page to learn more about our other consulting and fulfillment services offered to institutions to remain competitive, compliant, and in control.
