The U.S. Justice Department and Park National Bank in Newark entered into a $9 million agreement announced Tuesday to settle allegations the bank discriminated against Black and Hispanic borrowers by perpetuating redlining.
Redlining is the illegal practice of intentionally avoiding lending to people who live in a community of color. It has been a common discriminatory practice in cities all over the U.S. It was officially banned in the 1960s.
Kristen Clarke, assistant attorney general for civil rights, said the justice department found evidence that between 2015 and 2021 that Park National Bank intentionally avoided lending in majority Black and Hispanic neighborhoods. “They did not assign mortgage lenders to serve these neighborhoods, and significantly lagged behind its peered lenders in terms of mortgage lending activity in majority black and Hispanic communities," Clarke said.
Clarke said other lenders provided services to Black and Hispanic people at a higher rate.
The $9 million settlement requires the bank to 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 majority-Black and Hispanic neighborhoods in the Columbus area," according to a DOJ press release.
The agreement requires the bank to spend $750,000 on outreach, advertising, consumer financial education and credit counseling initiatives, and $500,000 on developing community partnerships "to provide services to residents of majority-Black and Hispanic areas that expand access to residential mortgage credit."
Besides the monetary investment, the settlement requires the bank 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; maintain the full-time position of director of community home lending and development, who is responsible for overseeing lending in majority-Black and Hispanic areas; and conduct a Community Credit Needs Assessment, a research-based market study, to help identify the needs for financial services in majority-Black and Hispanic census tracts in the Columbus area," the press release stated.
David Trautman, Park Chairman and Chief Executive Officer, said in a released statement, "While we disagree with any suggestion that intentional discrimination took place, we are united with the DOJ in our commitment to ensuring equal access to credit for all consumers. Park strongly condemns discrimination in any form. We will continue to serve our customers and our communities with the integrity and compassion that have been our hallmark for the past 115 years.”
Trautman added, "Our entire team takes pride in our legacy of corporate citizenship. We are proud of the way our lenders provide fair and equitable treatment to all borrowers, and we know we can do more to extend that service to individuals and families pursuing the dream of home ownership."
In the released statement, the bank also claims it supports several housing-related programs in the Columbus area.
Kenneth Parker, U.S. Attorney for the Southern District of Ohio, said the department "will not tolerate discriminatory lending practices."
The settlement is reflective of the federal government’s recent initiative to crack down on discriminatory lending practices.
Since the Justice Department’s Combating Redlining Initiative began, the department announced six redlining cases and settlements, and "secured $84 million in relief for communities of color that have been victims of lending discrimination across the country."
Click here for more information about the department’s fair lending enforcement.
People can report lending discrimination by calling the Justice Department’s housing discrimination tip line at 1-833-591-0291 or submitting a report online.
