Justice Department and North Carolina Reach $13.5 Million Agreement with First National Bank of Pennsylvania to Regarding Redlining

The First National Bank of Pennsylvania (FNB) has agreed to pay $13.5 million to resolve allegations by the U. S. Department of Justice (DOJ) and the State of North Carolina that it engaged in a pattern or practice of lending discrimination by redlining predominantly Black and Hispanic North Carolina neighborhoods. Redlining is an illegal practice in which lenders avoid providing credit services to individuals living in communities of color because of the race, color, or national origin of residents in those communities.

The complaint alleges that from 2017-2021, FNB failed to provide mortgage lending services to predominantly Black and Hispanic neighborhoods in Charlotte and Winston-Salem, and discouraged people seeking credit there from obtaining home loans. Instead, FNB’s home mortgage lending focused disproportionately on white areas of the cities. Other lenders had applications in predominantly Black and Hispanic neighborhoods at 2.5 times the rate of FNB in Charlotte and 4 times the rate in Winston-Salem. FNB’s branches in both cities were also mostly located in predominantly white neighborhoods. The bank closed its only branch in a predominantly Black and Hispanic neighborhood in Winston-Salem in 2021.

The complaint further alleges that FNB had mortgage loan officers working out of predominantly white areas to generate loan applications and that the bank did not track how they developed loan referrals or how they distributed the bank’s mortgage marketing materials.

Under the two proposed consent orders, FNB will invest $13.5 million to increase credit opportunities for communities of color in Charlotte and Winston-Salem, including: (1) $11.75 million in a loan subsidy fund to increase access to home mortgage, home improvement, and home refinance loans for residents of majority-Black and Hispanic neighborhoods in FNB’s service areas; (2) $1 million on community partnerships to provide services related to credit, consumer financial education, homeownership, and foreclosure prevention for residents of predominantly Black and Hispanic neighborhoods in those areas; (3) $750,000 for advertising, outreach, consumer financial education, and credit counseling for predominantly Black and Hispanic neighborhoods in the areas; (4) open three new branches in predominantly Black and Hispanic neighborhoods in the two cities, with at least one mortgage banker assigned to each branch; (5) hire a director of community lending to oversee the development of lending in communities of color; (6) retain independent consultants to enhance its fair lending program and better meet the communities’ needs for mortgage credit; (7) conduct a community credit needs assessment; (8) evaluate its fair lending compliance management systems; and (9) conduct staff trainings.

With assets of over $45 billion, FNB is headquartered in Pennsylvania and operates approximately 350 branches throughout the District of Columbia, Maryland, North Carolina, Ohio, Pennsylvania, South Carolina, Virginia, and West Virginia. It is among the 100 largest US banks.

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Photo by Andrew Stapleton on Unsplash

Read the February 5, 2024 DOJ release.

 Discrimination in Rental Housing

Property Management Company to Pay Nearly $75,000 to Resolve Service Members Civil Relief Act Claims

The U.S. Department of Justice (USDOJ) has announced that FPI Management Inc. (FPI) has agreed to pay $74,087 to resolve allegations that it violated the Service Members Civil Relief Act (SCRA) by imposing unlawful charges on nine service members who were exercising their right to terminate their apartment leases after receiving military orders to relocate. The SCRA extends various protections to service members to allow them to devote their entire energy to the national defense, including protections for service members in areas such as evictions, security deposits, pre-paid rent, civil judicial proceedings, installment contracts, interest rates, foreclosures and automobile leases; and allowance to terminate their residential leases after entering military service or receiving military orders for a permanent change of station, deployment or retirement. Landlords are prohibited from imposing an early termination charge on service members who terminate their leases under the SCRA.

The USDOJ started investigating FPI’s leasing practices after receiving a referral from Coast Guard Legal Assistance about two times where FPI attempted to require service members who were terminating their leases early under the SCRA to repay discounts they had received when they signed the lease in Oakland, California. Under the consent order, FPI has agreed to pay $51,587 to the service members and a $22,500 civil penalty. The order also requires FPI to repair the service members’ tenant database entries, implement new policies and procedures complying with the SCRA, and train employees on the SCRA. 

Service members and their dependents who believe that their rights under the SCRA have been violated should contact the nearest Armed Forces Legal Assistance Program Office. Office locations: legalassistance.law.af.mil. 

Read the June 13, 2023 USDOJ release.

GE to Pay $1.5 Billion U.S. Fine overSubprime Mortgage Fraud.

April 12, 2019. General Electric Co will pay a $1.5 billion civil fine to resolve the US Department of Justice (DOJ) examination of defective subprime mortgages from its former WMC Mortgage unit before the 2008 global financial crisis. DOJ said the agreement resolves claims that GE concealed the poor quality of the loans and WMC’s lax fraud controls when packaging the loans into residential mortgage-backed securities that it then sold to misled investors. WMC was purchased by GE’s finance unit, General Electric Capital Corp, in 2004, and issued over $65 billion of mortgage loans in the next three years. DOJ said WMC overstated the quality of a majority of loans it packaged into residential mortgage-backed securities, and its fraudulent practices resulted in billions of dollars of investor losses. https://www.reuters.com/article/us-ge-settlement/ge-to-pay-1-5-billion-u-s-fine-over-crisis-era-subprime-mortgages-idUSKCN1RO233.