/>iOn May 28, the U.S. Department of Justice filed a motion to terminate its redlining consent order against a New Jersey-based bank. The five-year order, entered in September 2022, resolved allegations that the banks violated the Fair Housing Act and Equal Credit Opportunity Act by engaging in a pattern of unlawful redlining in majority-Black and Hispanic neighborhoods across the Newark metropolitan area.
According to the DOJ’s original complaint and consent order, the bank allegedly avoided offering home loans in majority-minority census tracts while focusing mortgage services in predominantly white areas. The consent order required the bank to take several corrective actions, including:
- Establishing a $12 million loan subsidy fund. The fund was to be targeted to increase mortgage credit availability in majority-Black and Hispanic neighborhoods.
- Investing $750,000 in advertising and outreach. These funds were used to promote mortgage credit opportunities in undeserved areas and generate applications from qualified borrowers.
- Spending $400,000 on community partnerships. The bank was required to collaborate with nonprofit and government entities to deliver financial education, counseling, and related services.
- Opening new branches and assigning loan officers. The bank committed to opening at least two full-service branches and assigning at least four loan officers to focus on majority-Black and Hispanic tracts.
- Undergoing compliance oversight and fair lending program review. The consent order also mandated third-party training, internal policy assessments, and regular reporting to the DOJ.
The DOJ’s motion to terminate the order is currently pending with the U.S. District Court for the District of New Jersey.
Putting It Into Practice: Federal agencies are steadily stepping back from redlining enforcement, accelerating a trend away from the expansive fair lending cases brought in prior years (previously discussed here, and here). While lenders must continue to monitor for discriminatory effects in their credit operations, the likelihood of federal redlining actions based on marketing patterns or statistical disparities appears to be diminishing.
