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DOJ settles another redlining case

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Consumer Protection, Government Oversight, Nonbank Financial
Monday, March 6, 2023

The U.S. Department of Justice (DOJ) announced a $9 million settlement agreement with Newark, Ohio-based Park National Bank as part of the department’s Combatting Redlining Initiative.

“For far too long the doors to home ownership have been shut for Black families and many other people of color because of unlawful redlining by banks and other financial institutions,” Assistant Attorney General Kristen Clarke of the DOJ’s Civil Rights Division said. “When banks fail to provide equal access to lending services in neighborhoods of color, they engage in modern day redlining and exacerbate the racial wealth gap in our country. The Justice Department will continue to fight to fulfill the promise of our nation’s fair lending laws while tearing down the discriminatory barriers that deny Black people and other people of color access to economic opportunity and homeownership.”

According to the DOJ’s complaint, filed in federal court in the U.S. District Court for the Southern District of Ohio, Park National engaged in a pattern or practice of lending discrimination in the Columbus, Ohio, metro area.

The department alleged that, from 2015 to 2021, Park National failed to provide mortgage lending services by redlining majority-Black and Hispanic neighborhoods in the Columbus area. Specifically, DOJ alleged all of Park National’s branches and mortgage lenders in the Columbus area were concentrated in majority-white neighborhoods, and the bank failed to take any meaningful measures to compensate for its lack of physical presence in majority-Black and Hispanic communities.

“Let today’s settlement send a very clear message to banks: we will not tolerate discriminatory lending practices, and we will hold you accountable,” U.S. Attorney Kenneth Parker for the Southern District of Ohio said in a press release announcing the settlement. “We are committed to enforcing fair lending laws, which require financial institutions to provide equal opportunity for every American to obtain home loans and credit. We take very seriously our duty and honor to uphold those laws.”

Under the proposed order, Park National agreed, among other things, to:

  • Invest at least $7.75 million in a loan subsidy fund to increase access to credit for home mortgage, improvement, and refinance loans, as well as home equity loans and lines of credit, in majority-Black and Hispanic neighborhoods in the Columbus area; $750,000 in outreach, advertising, consumer financial education, and credit counseling initiatives; and $500,000 in developing community partnerships to provide services to residents of majority-Black and Hispanic areas that expand access to residential mortgage credit.
  • Open one new branch and one new mortgage loan production office in majority Black-and Hispanic neighborhoods in the Columbus area; ensure that a minimum of four mortgage lenders, at least one of whom is Spanish-speaking, are assigned to serve these neighborhoods; and maintain the full-time position of director of community home lending and development, who is responsible for overseeing lending in majority-Black and Hispanic areas.
  • Conduct a community credit needs assessment, a research-based market study, to help identify the needs for financial services in majority-Black and Hispanic census tracts in the Columbus area.

The DOJ’s Combating Redlining Initiative is a coordinated enforcement effort to address this persistent form of discrimination against communities of color. Since the Initiative was launched, the department has announced six redlining cases and settlements and secured $84 million in relief for communities of color that have been victims of lending discrimination across the country.

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Comments:

Monday, March 6, 2023
If you go to a CBDC, or continue to push a narrative that appraisals are not needed, this includes repealing the new Fannie Mae guidelines which allow the purchase of a new home up to $750k without an appraisal, you will be allowing redlining legally. The banks have won, the appraisal industry is being extinguished and redlining will be the norm. You do not make these changes and you will see the outcome.

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