DOJ Secures $31 Million Settlement from Bank Accused of Redlining

The DOJ obtained more than $31 million to resolve allegations against a bank for engaging in redlining practices in predominantly Black and Hispanic neighborhoods in Los Angeles County and for discouraging residents in those neighborhoods from applying for mortgage loans.

The DOJ alleged that the bank only opened one branch in a predominantly Black and Hispanic neighborhood in contrast to opening 10 branches in predominantly white neighborhoods during the same period. Further, the DOJ alleged that the bank did not assign an employee to generate mortgage loan applications at that branch. The DOJ had alleged that these actions violated the redlining prohibitions under the Fair Housing Act and the Equal Credit Opportunity Act.

Under the proposed consent order, filed in the Central District of California, the bank would be required to:

• invest (i) at least $29.5 million in a loan subsidy fund for residents of majority Black and Hispanic neighborhoods in Los Angeles County, (ii) at least $500,000 for advertising and outreach, (iii) at least $500,000 for a consumer financial education program and (iv) at least $750,000 for development of community partnerships to provide services that increase access to residential mortgage credit;

• open one new branch in a majority Black and Hispanic neighborhood, and evaluate future opportunities for expansion within Los Angeles County;

• dedicate mortgage loan officers, ensuring that at least four are dedicated to serving majority Black and Hispanic neighborhoods, and hire a full-time Community Lending Manager to oversee the lending program; and

• conduct research to help identify the specific financial needs of majority Black and Hispanic communities.