Justice Department, NJ bank reach $13M settlement in mortgage discrimination case

A federal complaint alleges that from at least 2015 to 2021, Lakeland Bank failed to provide mortgage lending services to Black and Latino communities in the Newark area.

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The U.S. Justice Department and a New Jersey bank have struck a $13 million settlement in a mortgage discrimination complaint that resulted in the third-largest redlining settlement in history.

According to a press release from the Justice Department, Lakeland Bank is alleged to have redlined as part of a pattern or practice of lending discrimination in the Newark metropolitan region, including in Essex, Somerset and Union counties. The term “redlining” refers to the illegal act of lenders refusing to offer credit to those living in areas of color because of their race, color or national origin.

“Redlining creates an unequal playing field that unfairly prevents many persons of color from achieving the dream of home ownership, and this type of systemic and intentional discrimination cannot and will not be tolerated,” said U.S. Attorney Philip R. Sellinger Wednesday in a statement.

This photo shows Attorney General Merrick B. Garland announcing the Justice Department’s Combating Redlining Initiative in October 2021 to confront lending discrimination against communities of color. The department and Lakeland Bank have now reached a $13 million settlement in a court case alleging redlining. (Photo: Screenshot/YouTube.com/The Justice Department)

The federal court complaint claims that from at least 2015 to 2021, Lakeland Bank failed to provide mortgage lending services to Black and Hispanic communities in the Newark area. Its loan agents allegedly failed to address the credit needs of Black and Hispanic neighborhoods, and all of its branches were located in regions with a predominance of white residents.

“Financial institutions that refuse to provide mortgage lending services to communities of color not only contribute to the persistent racial wealth gap that exists in this country, but also violate federal law,” Attorney General Merrick B. Garland said in a statement.

Garland announced the Justice Department’s Combating Redlining Initiative in October 2021 to confront lending discrimination against communities of color. Since its inception, the agency has reported four redlining lawsuits and settlements totaling $38 million in redress for communities suffering from lending prejudice.

He went on to say that the settlement with Lakeland demonstrates the Justice Department’s ongoing commitment to combating modern-day redlining and to “ensuring that all Americans have equal opportunity to obtain credit, no matter their race or national origin.”

Lakeland’s efforts to remedy the situation include an at least $12 million contribution to a loan subsidy fund for Black and Hispanic residents in the region, as well as $750,000 for advertising, outreach and consumer education, plus $400,000 for the development of community partnerships to provide services that widen access to residential mortgage credit.

A full-time community development officer will also be hired to oversee the growth of lending in the Newark region’s minority neighborhoods, where two new Lakeland branches will be opened.

“Ending redlining is a critical step in our work to close the widening gaps in wealth between communities of color and others,” said Kristen Clarke, assistant attorney general for civil rights at the Justice Department, in its statement. “Through this agreement, we are sending a strong message to the financial industry that we will not stand for discriminatory and unlawful barriers in residential mortgage lending.”

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