On October 10, the DOJ
announced its first redlining settlement against a credit union. The credit union agreed to pay over $6.5 million to resolve allegations of lending discrimination by redlining predominantly Black and Hispanic neighborhoods in and around Philadelphia.
According to the complaint, from at least 2017 through 2021, the credit union allegedly failed to provide mortgage lending services to majority-Black and Hispanic neighborhoods and discouraged residents from obtaining home loans. The credit union’s mortgage lending was allegedly disproportionately focused on white areas, with peer lenders generating mortgage applications and originating loans in Black and Hispanic neighborhoods at significantly higher rates. The complaint also notes that the credit union’s branches are almost exclusively located in majority-White neighborhoods, with none in Philadelphia, which contains a significant portion of the majority-Black and Hispanic neighborhoods in the market area.
Under the proposed consent order, the credit union will invest $6.52 million to increase credit opportunities for communities of color in and around Philadelphia — $6 million in a loan subsidy fund, $250,000 on community partnerships for financial education and foreclosure prevention, $270,000 for advertising and outreach, and the opening of three new branches in predominantly Black and Hispanic neighborhoods. Additionally, the credit union will hire a community lending officer and retain independent consultants to enhance its fair lending program. Finally, the DOJ noted that the credit union, which has assets of approximately $6 billion and operates 24 branches in Greater Philadelphia, cooperated with the investigation.
