Mortgage News March 21, 2023
Park National Bank has agreed to pay $9 million as part of a settlement with the U.S. Department of Justice (DOJ) to resolve allegations of discriminatory lending practices against Black and Hispanic neighborhoods in the Columbus area. The complaint, which was filed in federal court last month, alleges that the bank engaged in the illegal practice of redlining by avoiding providing mortgage lending services to these communities from 2015 to 2021.
The DOJ claims that Park National’s branches and mortgage lenders in the area were concentrated in majority-white neighborhoods and that the bank failed to take any meaningful measures to compensate for its limited physical presence in communities that are majority-Black and Hispanic.
As part of the proposed consent order, Park National Bank will invest $7.75 million in a loan subsidy fund to increase access to credit for home mortgage, improvement, and refinance loans, as well as home equity loans and lines of credit, in neighborhoods in the Columbus area that are majority-Black and Hispanic.
The bank will also invest $750,000 in outreach, advertising, consumer financial education, and credit counseling activities and allocate $500,000 to developing community partnerships to provide services to residents of majority-Black and Hispanic communities that expand access to residential mortgage credit.
The DOJ launched an initiative to combat redlining in October 2021 and has since announced six redlining cases and settlements, securing $84 million in relief for communities of color across the country that have been victims of lending discrimination. The largest settlement in the DOJ’s history was a $31 million settlement with City National Bank, which was accused of the illegal practice of avoiding the provision of mortgage services to majority-Black and Hispanic neighborhoods.
The DOJ’s efforts to combat redlining highlight the ongoing issue of systemic racism in the lending industry and the importance of taking action to ensure fair and equal access to credit services for all communities.
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