ONEWEST BANK REDLINING CASE

On July 29, 2019 the U.S. Department of Housing and Urban Development (HUD) announced that it has approved a Conciliation Agreement between the California Reinvestment Coalition and CIT Group, Inc., and CIT Bank, N.A., dba OneWest Bank, resolving allegations that the bank engaged in lending discrimination by “redlining” in the Los Angeles region.

OneWest Bank is a retail bank with 60 branches in Southern California. The complaint, filed by the California Reinvestment Coalition (CRC), alleged that from 2014 to at least 2017 OneWest Bank discriminated in the marketing and origination of home mortgages, as evidenced by the low number of mortgages it made to African-American and Latino borrowers relative to the demographics of the area and to the industry as a whole. The complaint also alleged that the bank located and maintained branches in areas that do not serve minority neighborhoods and borrowers. OneWest Bank denies discriminating in violation of the Act, but has entered into the Conciliation Agreement to provide “important and valuable assistance to minority communities in its service areas.”

As part of the settlement, OneWest Bank will invest $5 million in a loan subsidy fund to increase credit opportunities for residents of majority-minority neighborhoods; devote $1.3 million toward advertising and community outreach; and provide $1 million in grants for homebuyer education, credit counseling, community revitalization, and homeless programs. OneWest Bank is also committing to originate $100,000,000 in home purchase, home improvement and home refinance loans to borrowers in majority-minority areas, and to open a full-service branch serving the banking and credit needs of residents in a majority-minority and low- and moderate-income neighborhood.

After more than two years of no fair lending enforcement against financial institutions this is the second redlining case in two months. Two cases is not necessarily a trend, but if additional cases arise in the near term, there are a number of financial institutions across the U.S. that should be getting nervous. For further details see our June 30th article entitled Has Redlining Enforcement Returned.

A copy of the OneWest Conciliation Agreement is available at:  https://www.hud.gov/sites/dfiles/FHEO/documents/19CITCRCsigned.pdf

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