[co-author: Maxwell Earp-Thomas*]
On February 5, the DOJ and North Carolina’s attorney general announced a $13.5 million settlement deal with a large regional bank over redlining allegations.
In their complaint, filed in federal court of the Middle District of North Carolina, the agencies accused the bank of failing to provide access to mortgages and related lending services to minority populations by maintaining the majority of its branches and loan officers outside of the region’s predominantly Black and Hispanic neighborhoods. Furthermore, the complaint alleges that the bank’s marketing efforts in the region did not target communities of color and that the bank’s loan officers were “overwhelmingly white.”
Under the terms of the settlement, the bank will commit $15 million to a loan subsidy fund aimed at increasing access to affordable home financing for residents in the affected areas. Additionally, the bank has agreed to submit its fair lending compliance protocols to third-party review, and also pledged to open two new branches in minority neighborhoods, in an effort to provide more equal access to financial services. The bank did not admit wrongdoing and claimed that the alleged redlining is an issue inherited from its entry into the market, marked by its acquisition of a smaller North Carolina community bank.
*Maxwell Earp-Thomas is a law clerk in the firm’s Orange County office.
Putting it into Practice: This settlement underscores the federal government’s continuing commitment to enforcing fair lending laws and ensuring equal access to financial services, regardless of race or ethnicity. Federal and state authorities have demonstrated a heightened willingness to bring fair lending lawsuits and ensure market participants’ compliance with laws targeting discrimination in the provision of financial services (previously discussed here, here, and here). Banks would be wise to take steps to ensure they have the proper fair lending compliance protocols are in place, including appropriate marketing practices, to avoid becoming a target for regulators.
