WASHINGTON–Federal regulators and other authorities have announced a settlement in a case that had alleged redlining by a bank.
The Justice Department, the U.S. Attorney’s Office for the Western District of Tennessee, the Consumer Financial Protection Bureau (CFPB) and the Office of the Comptroller of the Currency (OCC) announced an agreement to resolve allegations that Trustmark National Bank engaged in lending discrimination by redlining predominantly Black and Hispanic neighborhoods in Memphis, Tennessee.
The parties’ proposed consent order was filed in conjunction with a complaint in the U.S. District Court for the Western District of Tennessee.
The complaint alleges that Trustmark National Bank violated the Fair Housing Act and the Equal Credit Opportunity Act, which prohibit financial institutions from discriminating on the basis of race, color or national origin in their mortgage lending services. The complaint also alleges that Trustmark National Bank violated the Consumer Financial Protection Act, which prohibits offering or providing to a consumer any financial product or service not in conformity with federal consumer financial law.
The Specifics
Specifically, the complaint alleges that, from 2014 to 2018, Trustmark engaged in unlawful redlining in Memphis by avoiding predominantly Black and Hispanic neighborhoods because of the race, color, and national origin of the people living in, or seeking credit for properties in, those neighborhoods.
In addition, the complaint also alleges that Trustmark’s branches were concentrated in majority-white neighborhoods, that the bank’s loan officers did not serve the credit needs of majority-Black and Hispanic neighborhoods, that Trustmark’s outreach and marketing avoided those neighborhoods, and that Trustmark’s internal fair-lending policies and procedures were inadequate to ensure that the bank provided equal access to credit to communities of color.
The Proposed Order
Under the proposed consent order:
- Trustmark will invest $3.85 million in a loan subsidy fund to increase credit opportunities for current and future residents of predominantly Black and Hispanic neighborhoods in the Memphis area; dedicate at least four mortgage loan officers or community lending specialists to these neighborhoods; and open a loan production office in a majority-Black and Hispanic neighborhood in Memphis.
- Trustmark will devote $400,000 to developing community partnerships to provide services to residents of majority-Black and Hispanic neighborhoods in Memphis that increase access to residential mortgage credit.
- Trustmark will devote at least $200,000 per year to advertising, outreach, consumer financial education and credit repair initiatives in and around Memphis.
- Trustmark will pay a total civil money penalty of $5 million to the OCC and CFPB.
- Trustmark already has established a Fair Lending Oversight Committee and designated a Community Lending Manager who will oversee these efforts and work in close consultation with the bank’s leadership.
In August 2021, the Justice Department announced a redlining settlement with Cadence Bank. Under the settlement, Cadence will invest over $5.5 million to increase credit opportunities for residents of majority-Black and Hispanic neighborhoods in Houston.