More Redlining in the News
Written by: Heather Papows, Loan Servicing & Secondary Market Consultant
OceanFirst Bank, a regional bank headquartered in NJ that operates in NJ, PA, MD, NY, and MA, has agreed to pay over $15 million to settle DOJ and HUD allegations of engaging in a pattern or practice of lending discrimination by redlining predominantly Black, Hispanic and Asian neighborhoods in three New Jersey counties.
The allegations state that “from 2018 through at least 2022, OceanFirst Bank failed to provide mortgage lending services to predominantly Black, Hispanic, and Asian neighborhoods” and “discouraged people seeking credit in those communities from obtaining home loans” by specifically focusing outreach, advertising, and branch locations in majority-white communities, and closing its only branches in the majority-Black, Hispanic, and Asian neighborhoods in those counties.
Redlining has been a persistent focal point of industry news and continues to haunt the regulatory landscape. In October 2021, the DOJ started a collaborative initiative to address redlining issues against communities of color, and by partnering with regulatory agencies, state Attorneys General offices, and US Attorney’s offices across the country, they have solidified 13 redlining resolutions that secured over $137 million in relief for affected communities across the country.
As part of the agreement to settle this redlining claim, OceanFirst has agreed to:
Invest at least $14 million in a loan subsidy fund to increase access to home mortgage, home improvement, and home refinance loans for residents of majority-Black, Hispanic, and Asian neighborhoods in Middlesex, Monmouth, and Ocean Counties;
Spend $400,000 on community partnerships to provide services related to credit, consumer financial education, homeownership, and foreclosure prevention for residents of predominantly Black, Hispanic, and Asian neighborhoods in those counties;
Spend $700,000 on advertising, outreach, consumer financial education, and credit counseling focused on predominantly Black, Hispanic, and Asian neighborhoods in those counties;
Open a loan production office and maintain the bank’s recently opened full-service branch, both located in predominantly Black, Hispanic, and Asian neighborhoods in those counties, with at least one mortgage loan officer assigned to each location;
Conduct a community credit needs assessment, evaluate its fair lending compliance management systems, and conduct staff trainings on fair lending; and
Hire a director of community lending who will oversee the continued development of home mortgage lending in communities of color.
SCA urges all lenders to conduct a thorough examination of their lending data through a fair lending lens. This involves identifying potential red flags or areas of concern that could lead to redlining allegations. And perhaps most importantly, proactively address possible issues with an action plan that demonstrates your commitment to serving all communities and combatting the ongoing redlining crisis. For help with this process, contact our Director, Bill Dolan, at wdolan@scapartnering.com or by phone at (617) 694-2617.
