The U. S. Department of Justice (DOJ) just announced that Citadel Federal Credit Union has agreed to pay over $6.5 million to resolve allegations that it engaged in a pattern or practice of lending discrimination by redlining predominantly Black and Hispanic neighborhoods in and around Philadelphia in violation of the Fair Housing Act (FHA) and the Equal Credit Opportunity Act (ECOA). This is DOJ’s first redlining settlement with a credit union under its Combating Redlining Initiative.
The DOJ complaint, filed in the Eastern District of Pennsylvania, alleges that, from at least 2017-2021, Citadel failed to provide mortgage lending services to majority-Black and Hispanic neighborhoods in and around Philadelphia and discouraged people wanting credit there from obtaining home loans. Citadel’s home mortgage lending was disproportionately in white areas around Greater Philadelphia. Similar lenders generated mortgage applications in predominately Black and Hispanic neighborhoods at almost three times that of Citadel and originated mortgage loans in these areas over three times Citadel's rate.
The complaint also alleges that Citadel’s branches are situated almost solely in majority-White neighborhoods, with no branches in Philadelphia, which has over 75% of the majority-Black and Hispanic neighborhoods and 34% of the total population in Citadel’s market area.
Under the proposed consent order, subject to court approval, Citadel has agreed to invest $6.52 million to increase credit opportunities for communities of color in and around Philadelphia. Citadel will:
- Invest at least $6 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 Philadelphia.
- Spend at least $250,000 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 its market area.
- Spend at least $270,000 for advertising, outreach, consumer financial education, and credit counseling in predominantly Black and Hispanic neighborhoods in Philadelphia.
- Open three new branches in predominantly Black and Hispanic neighborhoods in Philadelphia.
- Hire a community lending officer to oversee the continued development of lending in communities of color.
- Hire independent consultants to strengthen its fair lending program and better meet the communities’ mortgage credit needs.
- Conduct a community credit needs assessment, evaluate its fair lending compliance management systems, and conduct staff trainings.
With assets of approximately $6 billion, Citadel is headquartered in Pennsylvania and has 24 branches in Greater Philadelphia, including Bucks, Chester, Delaware, Lancaster, Montgomery, and Philadelphia Counties. The second largest credit union in the area with over 263,000 members, Citadel cooperated with the DOJ investigation.
Since 2021, the DOJ's Combating Redlining Initiative, a coordinated enforcement effort to address this persistent form of discrimination against communities of color, has announced 14 redlining resolutions and secured over $144 million in relief for communities of color that have been the victims of lending discrimination.
A copy of the complaint and information about DOJ’s fair lending enforcement work is at www.justice.gov/fairhousing. Individuals may report lending discrimination by calling the Justice Department’s housing discrimination tip line at 1-833-591-0291 or submitting a report online.
