The Department of Justice announced another multimillion-dollar settlement Tuesday in its campaign to combat discriminatory lending practices across the U.S. — an initiative that has won $84 million in relief to borrowers so far.
An Ohio bank accused of redlining majority-Black and Hispanic neighborhoods in the Columbus area has agreed to pay $9 million, said Kristen Clarke, assistant attorney general of the Justice Department’s Civil Rights Division.
The settlement marks the sixth such agreement under the department’s Combating Redlining Initiative, launched in 2021. It comes a month after the department announced the largest redlining settlement in its history – a $31 million agreement with City National Bank, the largest bank headquartered in Los Angeles.
“When banks fail to provide equal access to lending services in neighborhoods of color, they engage in modern-day redlining and exacerbate the racial wealth gap in our country,” Clarke said at the Martin Luther King Jr. branch of the Columbus Metropolitan Library. “Unfortunately, redlining has not yet been relegated to the dustbin of history.”
What is redlining?
“Redlining” is an illegal practice in which lenders avoid providing credit services to people living in communities of color because of the race, color or national origin of the residents, according to the Justice Department.
In the 20th century, banks determined neighborhoods where people of color lived — outlined in red ink — were deemed the riskiest to invest in. That meant it was largely impossible for people of color to get loans, thereby segregating communities.
What is Park National Bank accused of?
Park National Bank, headquartered in Newark, Ohio, has 92 branches across four states, with 20 in the Columbus area. The federal complaint alleges that, from at least 2015 to 2021, the bank did not provide mortgage lending services by redlining majority-Black and Hispanic neighborhoods in the Columbus area.
All of Park National’s branches and mortgage lenders in the area were concentrated in majority-white neighborhoods, and the bank failed to take any “meaningful measures” to compensate for its lack of physical presence in majority-Black and Hispanic communities, the complaint alleges.
Peer banks generated mortgage applications at a rate between five and ten times the rate of Park National in the majority-Black and Hispanic neighborhoods, Clarke said.
In a statement, Park National Bank Chairman and CEO David Trautman said he disagreed “with any suggestion that intentional discrimination took place.”
“We condemn discrimination in any form and stand firm in our commitment to providing equal access to credit for all borrowers,” Trautman said. “We look forward to creating even more opportunities for individuals and families to achieve the dream of home ownership.”
What happens to Park National Bank now?
As part of the settlement, the bank agreed to invest at least $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 majority-Black and Hispanic neighborhoods in the Columbus area.
The bank also agreed to invest $1.25 million in outreach, advertising, consumer financial education and credit counseling initiatives, as well as in developing community partnerships.
The bank agreed to open one new branch and one new mortgage loan production office in majority Black-and Hispanic neighborhoods in the Columbus area, ensure that a minimum of four mortgage lenders – at least one of whom is Spanish-speaking – are assigned to serve these neighborhoods and more.
What is the DOJ initiative to combat redlining?
The Justice Department’s Combating Redlining Initiative is its “most aggressive and coordinated effort” to address discriminatory lending practices, Clarke said.
The $84 million in relief to borrowers secured through the initiative so far includes $75 million in funds for loan assistance in impacted communities in Houston, Memphis, Philadelphia, New Jersey, Los Angeles and Ohio.
“This is about ensuring racial justice, economic justice and equal access to opportunity for all communities in our country,” Clarke said.