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Financial Services Law Insights and Observations

DOJ announces $9 million redlining settlement with Ohio bank

Federal Issues DOJ Discrimination Redlining Fair Lending Enforcement Settlement Consumer Finance

Federal Issues

On February 28, the DOJ announced a settlement with an Ohio-based bank to resolve allegations that the bank engaged in a pattern or practice of lending discrimination by engaging in “redlining” in the Columbus metropolitan area. The DOJ’s complaint claimed that from at least 2015 to 2021, the bank failed to provide mortgage lending services to Black and Hispanic neighborhoods in the Columbus area. The DOJ also alleged that all of the bank’s branches were concentrated in majority-white neighborhoods, and that the bank did not take meaningful measures to compensate for not having a physical presence in majority-Black and Hispanic communities.

Under the proposed consent order, the bank will, among other things, (i) invest a minimum of $7.75 million in a loan subsidy fund for majority-Black and Hispanic neighborhoods in the Columbus area to increase access to credit for home mortgage, improvement, and refinance loans, and home equity loans and lines of credit; (ii) invest $750,000 to go towards outreach, advertising, consumer financial education, and credit counseling initiatives; (iii) invest $500,000 to be spent in developing community partnerships to expand access to residential mortgage credit  for Black and Hispanic consumers; (iv) establish one new branch and one new mortgage loan production office in majority-Black and Hispanic neighborhoods in the Columbus area (the bank must “ensure that a minimum of four mortgage lenders, at least one of whom is Spanish-speaking, are assigned to serve these neighborhoods” and employ a full-time community development officer to oversee lending in these neighborhoods); and (v) conduct a community credit needs assessment to identify financial services needs in majority-Black and Hispanic census tracts in the Columbus area. The announcement cited the bank’s cooperation with the DOJ to remedy the identified redlining concerns.