‘Redlining Is Racist’: $12 Million Settlement Ends Lending Inquiry

Tracey Tully

28 September, 2022

A New Jersey-based bank accused by the Justice Department of redlining to avoid making loans in predominantly Black and Latino neighborhoods agreed on Wednesday to create a $12 million homeownership fund, in one of the largest federal settlements of its kind.

Lakeland Bank admitted no wrongdoing as part of a consent decree brokered by the U.S. Department of Justice, which had been investigating the bank’s lending practices between 2015 and last year. But Lakeland has agreed to open two new branches, including one in Newark, and to increase mortgage lending in underserved communities of color in three northern New Jersey counties.

The agreement with Lakeland follows similar settlements negotiated in the past year by the Justice Department with lending institutions in Houston, Memphis and Philadelphia, and is believed to be the third largest of its kind. Only a $25 million settlement with New Jersey-based Hudson City Savings Bank in 2015 and an $18 million settlement with Trident Mortgage involving redlining in the Philadelphia area in July were larger.

“We hope that this settlement sends a strong message regarding our commitment to ending redlining across the nation,” Kristen Clarke, assistant attorney general for civil rights, said in announcing the agreement.

“We’re creating home-ownership opportunities for borrowers and especially for borrowers of color,” she added.

Lakeland, a community bank in the midst of a negotiated merger with a rival institution, Provident, operates 68 branches in central and northern New Jersey and in New York’s Hudson Valley. The Justice Department had accused Lakeland of denying or discouraging loans in certain New Jersey neighborhoods based on the race, color or national origin of its residents, a discriminatory practice commonly known as redlining. All its branches were in majority-white neighborhoods, federal officials said, and its loan officers did not serve the credit needs of Black and Latino neighborhoods in and around Newark.

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‘Redlining Is Racist’: $12 Million Settlement Ends Lending Inquiry