DOJ Reaches $9 Million Redlining Consent Order with Rhode Island State-Chartered Bank
The DOJ entered into a $9 million settlement with a state-chartered bank in Rhode Island over alleged redlining in majority-Black and Hispanic neighborhoods.
The complaint, filed in the U.S. District Court for Rhode Island, alleges that from 2016 through at least 2021 the bank failed to provide mortgage lending services to majority-Black and Hispanic neighborhoods in Rhode Island. The bank never opened any branches in majority-Black and Hispanic neighborhoods throughout its expansion across the state, and the bank’s peer lenders allegedly generated applications from majority-Black and Hispanic areas at nearly four times the rate of the bank. The complaint also alleges that the bank relied on mortgage loan officers working out of majority-white areas as the primary source for generating loan applications and failed to conduct outreach, marketing, and advertising of mortgage services in majority-Black and Hispanic areas. This included failing to train or incentivize its lending or marketing staff to compensate for its lack of branches and presence in majority-Black and Hispanic areas through other marketing and outreach activity. The complaint further alleges that, even when the bank generated loan applications from majority-Black and Hispanic areas, the applicants themselves were disproportionately white.
Under the consent order, the bank agrees to invest at least $7 million in a loan subsidy fund to support mortgages for applicants in majority-Black and Hispanic census tracts. Further, the bank must spend $1 million on partnerships with community-based or governmental organizations that provide services related to credit, financial education, homeownership, and foreclosure prevention to residents in these areas, and must also spend $1 million on advertising, outreach, consumer financial education, and credit counseling efforts in these areas.
Finally, the bank agrees to hire a new Director of Community Lending, to open two new full-service branches located in majority-minority neighborhoods, and to ensure at least two full-time mortgage loan officers or community lending officers are dedicated to serving majority-minority areas.
