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Over $13 Million Settlement Ensures Equal Home Loan Opportunities in New Jersey

By metrostaff on
New Jersey

According to New Jersey Officials, an agreement to resolve allegations that Lakeland Bank engaged in a pattern or practice of lending discrimination by “redlining” in the Newark metropolitan area, including neighborhoods in Essex, Somerset and Union counties in New Jersey.

Officials said, this resolution is part of the Justice Department’s Combatting Redlining Initiative and represents the third-largest redlining settlement in department history.

“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.

“The agreement with Lakeland announced today represents the Justice Department’s continued commitment to addressing modern-day redlining, and to ensuring that all Americans have equal opportunity to obtain credit, no matter their race 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,” U.S. Attorney Philip R. Sellinger said.

“It is wholly unacceptable that redlining persists into the 21st Century, and this case demonstrates our commitment to combatting redlining and hold banks and others accountable when they engage in unlawful discrimination.

Through this agreement, we are taking a major step forward by removing unlawful and discriminatory barriers in residential mortgage lending.”

“Ending redlining is a critical step in our work to close the widening gaps in wealth between communities of color and others,” Assistant Attorney General Kristen Clarke for the Justice Department’s Civil Rights Division said.

“This settlement demonstrates our firm commitment to combatting modern day redlining and holding banks and other lenders accountable when they deny people of color equal access to lending opportunities.

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.”

“Redlining” is an illegal practice in which lenders avoid providing credit services to individuals living in communities of color because of the race, color, or national origin of the residents in those communities.

The complaint filed in federal court today alleges that, from at least 2015 to 2021, Lakeland failed to provide mortgage lending services to Black and Hispanic neighborhoods in the Newark metropolitan area, that all its branches were located in majority-white neighborhoods, and that its loan officers did not serve the credit needs of Black and Hispanic neighborhoods in and around Newark.

 

Under the proposed consent order, which is subject to court approval and was filed today in the U.S. District Court for the District of New Jersey along with a complaint, Lakeland has agreed to do the following:

• Invest at least $12 million in a loan subsidy fund for residents of Black and Hispanic neighborhoods in the Newark area; $750,000 for advertising, outreach and consumer education; and $400,000 for development of community partnerships to provide services that increase access to residential mortgage credit.

• Open two new branches in neighborhoods of color, including at least one in the city of Newark; ensure at least four mortgage loan officers are dedicated to serving all neighborhoods in and around Newark; and employ a full-time Community Development Officer who will oversee the continued development of lending in neighborhoods of color in the Newark area.

• Maintain an expanded Community Reinvestment Act Assessment Area that includes Essex, Somerset and Union counties.

Lakeland has agreed to settle this matter without contested litigation and worked cooperatively with the department to remedy the redlining concerns that were identified.

In October 2021, Attorney General Merrick B. Garland launched the Justice Department’s Combatting Redlining Initiative, a coordinated enforcement effort to address this persistent form of discrimination against communities of color.

The initiative is expanding the department’s reach by strengthening partnerships with U.S. Attorneys’ Offices around the country, regulatory partners and its partners in state attorneys general offices.

Since the initiative was launched, the department has announced four redlining cases and settlements with a combined $38 million in relief for communities that have been the victims of lending discrimination.

This includes the $20 million settlement with Trident Mortgage Company—the second largest settlement in Justice Department history.