A New Jersey bank has agreed to pay a $13 million settlement after being accused of intentionally avoiding Black and Hispanic customers seeking mortgages.
According to NJ.com, Lakeland Bank has settled in racial discrimination lawsuit alleging that the business engaged in redlining, a practice where banks refuse to lend money or extend credit to potential homebuyers or homeowners who are Black or Latino.
“Lakeland avoided serving the credit needs of borrowers in majority Black and Hispanic census tracts in the Newark (area) and discouraged borrowers in majority Black and Hispanic census tracts in the Newark (area) from obtaining mortgage loans, while acting to serve the credit needs for mortgage loans in majority-white census tracts,” the U.S. Attorney’s Office for New Jersey said in a consent order.
The bank is accused of redlining from 2015 to 2021, despite this "form of discrimination" being "barred by law for decades," U.S. Attorney for New Jersey Phillip Sellinge said in a statement.
“If you lived in a Black or Hispanic neighborhood you likely had little opportunity to apply for let alone obtain a loan from Lakeland bank," Sellinge said. “The avoidance went beyond brick and mortar locations. Lakeland unlawfully avoided serving neighborhoods that were Black or Hispanic while serving nearby white majority suburbs.”
"There were qualified buyers — Lakeland just didn’t service them,” he added.
As part of the settlement, Lakeland Bank admitted no fault to redlining but will invest a minimum of $12 million in a loan subsidy fund for people in Black and Hispanic areas.
The New Jersey bank has also committed to training its employees on fair lending practices and opening two locations in Black or Hispanic areas.
According to reports, a new branch is set to open in Newark, which holds a nearly 50 percent Black population.