Blog Enforcement Watch August 30, 2021

DOJ and OCC Obtain $5.5 Million Settlement, Resolving Allegations of Lending Discrimination

On August 30, 2021, the Department of Justice (DOJ) announced that, together with Office of the Comptroller of the Currency (OCC), it reached a settlement with a bank, resolving allegations that the bank engaged in lender discrimination in the Houston, Texas area.

In 2017, the OCC initiated a fair lending examination of the bank. Two years later, the OCC referred the matter to the DOJ after determining that the bank had likely violated the Fair Housing Act (FHA).  On August 30, 2021, the DOJ filed a complaint in the United States District Court for the Northern District of Georgia alleging that the bank violated the FHA and the Equal Credit Opportunity Act (ECOA) by engaging in redlining from 2013 through 2017.  Specifically, the DOJ alleged that the bank avoided providing home loans and other home mortgage services in majority-Black and Hispanic neighborhoods, located and maintained nearly all of its branches in majority-white neighborhoods, and concentrated its marketing, outreach, and advertising in majority-white neighborhoods.

Under the consent order, the bank is required to engage a qualified third-party consultant to evaluate the its fair lending program and assist the bank in developing a Fair Lending Plan.  The bank must also provide fair lending training to its employees.  Additionally, the bank must invest a minimum of $4.17 million into a loan subsidy program to increase the credit that the bank offers for home mortgage loans to residents in majority-Black and Hispanic neighborhoods in the Houston area.  The bank must also partner with one or more community-based or governmental originations that provide the residents of majority-Black and Hispanic neighborhoods in the Houston area with homeownership services and through these partnerships spend a minimum of $750,000 on services to those residents.  Finally, the bank must spend at least $625,000 on advertising, outreach, consumer financial education, and credit repair initiatives targeted at those communities.

In addition to its consent order with the DOJ, the bank was assessed a $3 million civil money penalty by the OCC. ​

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