Blog
Consumer Finance Insights
September 25, 2015

CFPB & DOJ Reach $27M Settlement with Regional Bank over Redlining Allegations

​On September 24, 2015, the CFPB and the DOJ announced a settlement with a regional bank over allegeatoins that it engaged in redlining practices in violation of the Equal Credit Opportunity Act (ECOA). According to the complaint, the bank allegedly discriminated against minorities by systematically preventing residents of certain minority neighborhoods from obtaining mortgage loans. According to the CFPB, the bank allegedly placed most of its branches and loan officers outside of minority neighborhoods, excluded minority neighborhoods from the bank’s Community Reinvestment Act assessment area and other low income loan programs, and selected mortgage brokers who were located outside of minority neighborhoods.  Under the proposed consent order​, which still requires court approval, the bank has agreed to the following: (1) pay $25 million to a loan subsidy program; (2) a $5.5 million penalty; (3) spend $1 million on advertising targeted to minority neighborhoods; (4) spend $750,000 on partnerships with local minority organizations that provide assistance to residents of minority neighborhoods; (5) spend $500,000 on consumer education activities; and (6) offer banking services in minority neighborhoods and otherwise expand credit services in minority communities. The bank did not admit to any wrongdoing as part of the settlement.