Pennsylvania Lender to Pay $3M in DOJ Redlining Settlement
Written by: Bill Dolan, CMB, AMP
Essa Bank & Trust, a bank located in Stroudsberg, PA will pay more than $3M to settle redlining allegations announced by the Justice Department today.
Between 2017-2021. The bank, “failed to provide mortgage lending services and did not serve the credit needs of majority-Black and Hispanic neighborhoods” in and around Philadelphia.
As SCA has pointed out since the beginning of 2023, this settlement marks the seventh redlining-related resolution that the DOJ has reached since launching a coordinated effort with the CFPB and the OCC to fight lending discrimination. It was the FDIC who brought the allegations to the DOJ in 2022 which then launched an investigation in August 2022.
As part of the settlement, ESSA Bank & Trust has agreed to invest at least $2.92M in a loan subsidy fund meant to increase access to credit for home mortgages, improvement, and refinancing in majority-Black and Hispanic neighborhoods within the bank’s lending area.
At least half of the investment must be used for consumers applying for loans in majority-Black and Hispanic census tracts within a five-mile radius of the bank’s branches according to the court order.
The bank also agreed to $125,000.00 in community partnerships and $250,000.00 on advertising, outreach, consumer financial education, and credit counseling targeting majority-Black and Hispanic communities.
ESS must also hire two new mortgage loan officers to serve the branches in West Philadelphia and must conduct a research-based market study to help identify financial services needs in communities of color. The settlement will remain in effect for 5 years.
If you think that this only happens to the “big” guys, think again. In researching for this article, Essa Bancorp held consolidated assets of $1.9billion.
The question every bank should be asking themselves is: “What kind of shape is my CRA/Fair Lending program in and am I prepared for the next upcoming exam?”
SCA’s Compliance team, comprised of highly skilled and former regulators, examiners, and Compliance directors, will prepare you and your institution on what to expect from the examiners and how to respond if you have a solid plan in place for both monitoring and testing, as well as a comprehensive review of your current organization, your policies and your lending programs.
To learn how you can relieve the stress of your next exam, SCA will not only identify gaps, weaknesses, and inconsistencies in your data, but will provide the necessary recommendations to implement corrective actions prior to the examiners’ on-site arrival.
Depending on the timing of your exam, SCA will prepare an Executive Summary and deliver a remote presentation to you, your executive management team and for your Board of Directors prior to the exam.
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Now that you know what SCA can do for you, reach out and contact Bill Dolan, Director at (617) 694-2617 or email: Wdolan@scapartnering.com. View our website at: www.scapartnering.com to learn more about our other services and business units ready to address: Strategic Planning, Compliance & Regulations, Servicing, Technology, Lending Solutions, and Managed Services that include: Outsourcing, Staffing, and Training. For CEO’s and CFOs, our Mortgage Advisory Group who oversees the SCA Mortgage Exchange and works with you to Buy/Sell specific loan products and pools, to support unique balance sheet needs and bolster CRA requirements to increase liquidity and profitability.
