The Justice Department has settled another case involving an alleged redlining by a real estate lender, this time in the Philadelphia area.
ESSA Bank & Trust agreed last week to pay more than $3 million to settle allegations that it discriminated against people living in majority-Black and Hispanic-majority neighborhoods in the Philadelphia metropolitan area between 2017 and 2021, over four years, according to the press release.
Under the proposed settlement, ESSA will invest nearly $3 million in the Loan Subsidy Fund to increase access to credit for home mortgages, improvement and refinancing loans, and home equity loans and lines of credit in communities with a majority of residents of color.
ESSA also agreed to pay $125,000 for community partnerships and $250,000 for outreach, education and counseling to expand services to these communities. The bank also needs to hire two new loan officers at its West Philadelphia branch and conduct a study to determine the need for financial services in communities of color. The settlement still needs to be approved by the court.
“For too long, residents of communities of color have been unlawfully denied equal access to credit and excluded from economic opportunity,” Assistant Attorney General Kristin Clark of the Justice Department’s Civil Rights Division said in a statement. “When banks redline, they perpetuate existing patterns of segregation and widen the racial wealth gap in our nation. This resolution articulates our commitment to hold banks and financial institutions accountable to modern redlining while ensuring that people of color communities get fair credit.”
Since October 2021, DOJ is prioritizing redline cases according to its priorities Combating the Red Line Initiative.
In July 2022, Trident Mortgage Company, a former mortgage lender with ties to Warren Buffett, agreed to pay $20 million, the second-largest redline case settlement in Justice Department history. The company will no longer service loans and will also be required to contract with another lender to serve affected communities.
In September 2022, Lakeland Bank, which operates in northern New Jersey and the Hudson Valley, agreed to create a $12 million homeownership fund. It will also open two new branches and increase mortgage lending to underserved communities of color in northern New Jersey.
