DOJ and federal regulators sue banks for alleged redlining practices

Over the past several months, the Department of Justice (DOJ) and federal regulators have hit two national banks with complaints alleging fair lending violations. The banks are alleged to have engaged in redlining practices with the effect of discouraging prospective applicants in majority-Black and Hispanic areas from seeking and obtaining mortgage loans.

In the most recent complaint, the DOJ along with the Consumer Financial Protection Bureau (Bureau) and the Office of the Comptroller of the Currency (OCC) alleged Trustmark National Bank (Trustmark) engaged in redlining practices in the Memphis Statistical Area. The complaint alleged Trustmark located and maintained almost all its branch locations and mortgage loan officers in majority-white areas and lacked adequate fair-lending policies and internal controls to detect fair lending violations. As a result of these practices, the Federal government asserted Trustmark’s lending policies discouraged loan applications and loan-making. The factual allegations of the complaint are as follows:

• Fifty percent of the census tract that makes up the Memphis Statistical Area is majority-Black and Hispanic. However, Trustmark between 2014 and 2018 concentrated 21 of its 25 branches in majority-white areas while Trustmark only maintained 4 branches in majority-Black and Hispanic areas.

 

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