The Department of Justice is busy filing Fair Lending Redlining cases this Halloween: Are you scared?
Written by: Rob Ellis, Regulatory Compliance Consultant
During the past month, three banks have entered multi-million dollar settlement agreements with the Department of Justice to resolve Fair Lending/ Redlining allegations:
Ameris Bank [1], $25 billion - FDIC and CFPB Regulated
American Bank of Oklahoma [2], $366 million - FDIC Regulated, and
Washington Trust Company [3], $6.85 billion - FDIC Regulated
These cases (as well as three additional cases in 2023) all resemble a similar pattern of allegations:
Branches and Loan Production Offices are concentrated in majority-White neighborhoods and thus avoid serving the credit needs of residents in majority-Black and Hispanic neighborhoods.
Mortgage Loan Officers served the credit needs of majority-White neighborhoods but did not serve the credit needs of majority-Black and Hispanic neighborhoods.
Failing to monitor or document where its Loan Officers developed referral sources or to whom Loan Officers distributed marketing or outreach materials related to mortgage lending services to ensure that distributions occurred in all neighborhoods.
Targeted advertising efforts to majority-White areas but making no or minimal efforts to similarly target advertising to majority-Black and Hispanic areas.
Failed to properly monitor redlining risk and subsequently address known redlining risk.
HMDA Data revealed disproportionately low home loan applications and originations from Majority-Black and Hispanic Neighborhoods.
In addition, Attorney General Merrick Garland said during a press conference that the Justice Department’s settlement with Ameris Bancorp over redlining allegations is part of a broader problem with credit access for minority borrowers. “I think we have another 20 or so pending open investigations, so this is not just a Jacksonville problem, not just an Ameris problem”, Garland said. (source - Bloomberg News)
Have you implemented an effective Fair Lending Compliance Management System, analyzed your marketing and assessment area, analyzed HMDA Data, Marketing and Training recently? We can help! Contact Bill Dolan, Director, at WDolan@scapartnering.com or by phone at (617) 694-2617 for more information.
[1] Ameris Trust Complaint (justice.gov)
[2] Complaint - United States v. American Bank of Oklahoma (N.D. Okla.) (justice.gov)
[3] washington_trust_complaint.pdf (justice.gov)
