Citadel FCU Redlining Settlement Proves It’s Time To Bring Credit Unions Under Community Reinvestment Act Enforcement

The recent U.S. Department of Justice (DOJ) law enforcement settlement with Citadel Federal Credit Union is excellent evidence why the Community Reinvestment Act’s (CRA) omission of credit unions from its rules is a mistake, according to the National Community Reinvestment Coalition (NCRC). Citadel FCU agreed to a $6.5 million settlement regarding its alleged discouragement of homebuyers in Black and Hispanic neighborhoods of Philadelphia from applying for mortgages and systematically declined to make mortgages in those neighborhoods. Citadel maintains its innocence in the settlement.

“It no longer makes sense to let credit unions out of the common-sense obligations that CRA puts on traditional banks. Citadel’s alleged conduct in the case it just paid $6.5 million to settle is a timely demonstration of the problem and the need to enhance fair lending protections for credit union customers. Despite their public perception as a gentler, kinder, more community-minded provider of retail banking services, credit unions are just as capable of violating borrowers’ civil rights as any other financial institution. Whatever the driving causes underlying such violations, we know how to fix the problem: Supervise credit unions under CRA so that they can prove their actual actions live up to their public image.”

Such failures and business practices are commonly uncovered in traditional banking through regular federal CRA examinations, which are conducted every few years. Extending CRA to cover credit unions would both improve oversight and put new capital into neglected communities as the firms move into compliance with the law’s requirements. Bringing credit unions under CRA would ensure that they face an affirmative and binding obligation to those same people and communities.

Read the October 15, 2024 NCRC article.

Justice Department Secures Over $6.5M from Citadel Federal Credit Union for Redlining Philadelphia Area Black and Hispanic Communities

 

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.

Read the October 10, 2024 DOJ press release.

Take the Baltimore Housing Plan Survey Today! Your Voice Matters!

This is your chance to make your opinion and preferences known about Baltimore's housing now and in the future! The Baltimore City Department of Housing and Community Development (DHCD) is seeking input from residents like you to better plan for affordable housing across our city. This work will move Baltimore forward. We are focused on creating a plan that strengthens and revitalizes neighborhoods for all residents, at all income levels. 

By participating in our survey, you can play a vital role in shaping policies and initiatives that increase access to safe, decent, stable, and affordable housing options for all Baltimoreans. The Baltimore City Comprehensive Housing Plan will consist of actions to expand affordable housing, minimize displacement for current residents, and to build trust with our communities. Through an intentional review of existing programs, the new Housing Plan will identify opportunities, potential policies, and barriers that hamper community growth and the funding sources necessary to realize our shared goals. This new plan will be particularly focused on making housing affordable at all income levels throughout the city - not just neighborhoods with a high concentration of vacancies.  

Baltimore city residents are strongly encouraged to participate in the planning and development process through taking the online survey and attending town halls. Our DHCD project team also will talk with faith-based organizations and places of worship, housing developers, CDC’s, community benefit organizations and non-profits, government agencies, and elected officials to assess the current state of housing affordability in Baltimore and to develop solutions. 

VIEW HOUSING PLAN PROCESS OVERVIEW POWER POINT PRESENTATION

VIEW HOUSING PLAN TOWN HALL PRESENTATION (English and Espanol) 

What the Survey Covers - The survey asks questions about your current housing situation, housing costs, and any difficulties you  have in finding or maintaining affordable housing. It will also gather information about your household size and income levels. This comprehensive approach will help DHCD gain a better understanding of the affordable housing experience in Baltimore. The survey is available online and can be accessed through the following link:  https://bit.ly/DHCDHousingSurvey. It should take only about 15 minutes to complete. The survey will be open until October 25, 2024.

Why This Survey Matters  - Stable, affordable housing is the foundation of all other needs and strongly influences individual, family, and community health. Your insights will provide DHCD with valuable data to develop effective strategies and allocate resources where they are most needed. This is an opportunity to ensure that your housing challenges and preferences are heard and incorporated into the City’s first-ever comprehensive housing plan. The new housing plan will consider previous efforts, including the Framework for Community Development and the recently-published plan to eliminate vacancies. This will result in a Plan that will benefit the unique market features of Baltimore City.  

Confidentiality-Privacy  - Your responses to our survey will be kept strictly confidential, and your personal information will not be shared or used for any purpose other than this survey.  

Thank You for Participating - By participating in this survey, you are contributing to a more equitable and inclusive Baltimore, where everyone has access to quality, affordable housing. Your input is invaluable. We thank you in advance for sharing your experiences and perspectives. 

 Read about the Mayor's July 17, 2024 announcement of the Plan.

Read DHCD's website summary of the Plan.

CFPB and Justice Department Charge Fairway for Redlining Black Neighborhoods in Birmingham, Alabama

The Consumer Financial Protection Bureau (CFPB) and the U.S. Department of Justice (DOJ) took action to end Fairway Independent Mortgage Corporation’s illegal mortgage lending discrimination against majority-Black neighborhoods in the greater Birmingham, Alabama area. The CFPB and DOJ allege that Fairway illegally redlined Black neighborhoods, including through its marketing and sales actions. Fairway’s actions discouraged people from applying for mortgage loans in the Birmingham metropolitan area’s Black neighborhoods. If entered by the court, the settlement would require Fairway to pay a $1.9 million civil penalty to the CFPB’s victims relief fund. Fairway would also be required to provide $7 million for a loan subsidy program to offer affordable home purchase, refinance, and home improvement loans in majority-Black neighborhoods. Redlining is the illegal practice of denying the same access to credit to certain neighborhoods based on the racial or ethnic composition of those areas. 

Fairway is a non-depository mortgage company based in Madison, Wisconsin, and operates in the Birmingham area under the trade name MortgageBanc. In 2023, Fairway was the third largest mortgage lender, receiving over 100,000 applications and originating over $24 billion in loans. In this closely held company, Steve Jacobson is the majority owner.

The complaint describes how Fairway redlined majority-Black neighborhoods in the Birmingham Metropolitan Statistical Area (Birmingham MSA). During the period covered by the complaint, the Birmingham MSA included six counties in north central Alabama with a population of about 1.1 million. While Fairway claimed to serve the entire metropolitan area, it concentrated all its retail loan offices in majority-white areas, directed less than 3% of its direct mail advertising to consumers in majority-Black areas during 2018-2020, and discouraged homeownership in majority-Black areas by generating loan applications at a rate far below its peer institutions.

The CFPB and DOJ allege that Fairway violated the Equal Credit Opportunity Act, the Consumer Financial Protection Act, and the Fair Housing Act. Specifically, the government alleges problematic conduct by Fairway including:

• Failing to address known signs of discrimination: Fairway's own data showed that it was failing to serve majority-Black neighborhoods in the Birmingham area. Before October 2022, it took no steps to address redlining risk other than telling loan officers not to discriminate. Only 3.7% of Fairway’s applications during 2018-2022 were for properties in majority-Black areas, compared to 12.2% for similar lenders. This disparity was higher in neighborhoods with 80% or more Black residents, where it made loans at less than 1/8 the rate of its peer lenders. Fairway did not adopt any written plan for marketing or growth to address the concern.

• Redlining Black neighborhoods: From 2015 through 2022, Fairway operated three retail loan offices and three loan production desks in real estate offices in the Birmingham metropolitan area, all in majority-white areas. Fairway also relied on referrals from real estate professionals and others to generate applications, and the vast majority of Fairway’s referral sources and referred consumers were located in majority-white areas. Fairway predominantly directed its marketing to majority-white areas. By doing this, Fairway unlawfully discouraged mortgage loan applications for properties in majority-Black neighborhoods.

Under the Consumer Financial Protection Act of 2010 (CFPA), the CFPB has the authority to take enforcement action against institutions that violate federal consumer financial protection laws, including violations of the Equal Credit Opportunity Act and its implementing regulation, Regulation B. The DOJ agreed with CFPB’s claim that Fairway violated the Equal Credit Opportunity Act and its implementing regulation, and separately alleges that Fairway violated the Fair Housing Act.

The proposed order filed by CFPB and DOJ would require Fairway to:

• Pay a $1.9 million penalty: The penalty against Fairway would be paid into the CFPB’s Civil Penalty Fund, also referred to as the victims relief fund.
• Provide $7 million for a loan subsidy program: The order would require Fairway to offer home purchase, refinance, and home improvement loans on a more affordable basis than otherwise available in majority-Black neighborhoods in the Birmingham metropolitan area.
• Pay at least $1 million to serve neighborhoods it redlined to address some of the gap in credit access caused by its discriminatory activities. Fairway would be required to open or acquire a new loan production office or full-service retail office in a majority-Black neighborhood in the Birmingham metropolitan area, and will pay (2) at least $500,000 for advertising and outreach, (3) at least $250,000 on consumer financial education, and (4) at least $250,000 on partnerships with community-based or governmental organizations to serve neighborhoods previously redlined by the company.

Read the proposed order.

Consumers can submit complaints about financial products and services by visiting the CFPB’s website or by calling (855) 411-CFPB (2372).

Employees who believe their company has violated federal consumer financial protection laws are encouraged to send information about what they know to whistleblower@cfpb.gov. To learn more about reporting potential industry misconduct, visit the CFPB’s website.

HUD Charges New Hampshire Property Managers and Landlord with Discrimination for a Retaliatory Eviction

 

The U.S. Department of Housing and Urban Development (HUD) has charged Greenview Associates L.P., Palmer Asset Management, LLC, and John Martin, property managers and landlord in Manchester, New Hampshire, with violating the Fair Housing Act by retaliating, threatening, or interfering with a tenant’s fair housing rights. HUD’s Charge alleges that, following the tenant’s filing of a Fair Housing complaint with HUD, the landlord and property manager did a background check on the tenant, not their usual practice of not running background checks, and then sought eviction of the tenant based on a long-past event that the background check revealed. Read HUD’s Charge.

A U. S. Administrative Law Judge will hear HUD’s charge unless any party to the charge elects to have the case heard in federal district court. If an administrative law judge finds, after a hearing, that discrimination has occurred, they may award damages to the individuals for their losses as a result of the discrimination, injunctive relief, other equitable relief, and payment of attorney fees. In addition, the judge may impose civil penalties to vindicate the public interest. If the federal court hears the case, the judge may also award punitive damages to the complainant.

For more information on potentially discriminatory evictions, please refer to this HUD Fact Sheet.

People who believe they are the victims of housing discrimination should contact HUD at (800) 669-9777 (voice) 800-927-9275 (TTY). Additional information is available at www.hud.gov/fairhousing and www.justice.gov. Materials and assistance are available for persons with limited English proficiency. Individuals who are deaf or hard of hearing may contact the Department using the Federal Relay Service at (800) 877-8339.

Read the October 11, 2024 HUD press release.

FBI 2023 Crime in the Nation Statistics Find Hate Crime Incidents Reached a Record High of 11,862 - 15% were Anti-Jewish

 

The FBI just released detailed data on over 14 million criminal offenses for 2023 reported to the Uniform Crime Reporting (UCR) Program by participating law enforcement agencies. Over 16,000 state, county, city, university and college, and tribal agencies, covering a combined population of 94.3% inhabitants, submitted data to the UCR Program through the National Incident-Based Reporting System (NIBRS) and the Summary Reporting System.

The data reveals that reported hate crime incidents were a new high of 11,862 in 2023. Although Jews only make up around 2% of the U.S. population, reported single-bias anti-Jewish hate crimes were 15% of all hate crimes reported and 68% of all reported religion-based hate crimes. Hate crimes were defined as offenses being motivated by bias toward race, ethnicity, ancestry, religion, sexual orientation, disability, gender, and gender identity.  

The FBI’s crime statistics estimates, based on reported data for 2023, show that national violent crime decreased an estimated 3.0% in 2023 compared to 2022:  

• Murder and non-negligent manslaughter recorded a 2023 estimated nationwide decrease of 11.6% compared to 2022.  
• In 2023, the estimated number of offenses in the revised rape category saw an estimated 9.4% decrease.  
• Aggravated assault decreased an estimated 2.8% in 2023. 
• Robbery decreased 0.3% nationally.  

To publish a national trend, the FBI’s UCR Program used a dataset of reported hate crime incidents and zero reports submitted by agencies reporting six or more common months or two or more common quarters (six months) of hate crime data to the FBI UCR Program for 2022 and 2023. According to this dataset, reported hate crime incidents decreased 0.6% from 10,687 in 2022 to 10,627 in 2023.  

The complete analysis is located on the FBI’s Crime Data Explorer.

Read the September 23, 2024 FBI article.

More Banks & Non-Bank Lenders are Omitting Racial Information from Home Loan Data — Preventing the Identification of Lending Discrimination

 

The Home Mortgage Disclosure Act (HMDA) legally requires 5,000 financial institutions that originated a home loan in the U.S. to collect information about race to help identify potential discrimination against borrowers. The data has in the past year been cited by the Consumer Financial Protection Bureau among others.

However, over 12% of borrowers do not give the information requested by the law and some 90% of loans sold to third parties do not provide the racial data that is acquired, according to the National Community Reinvestment Coalition (NCRC). “The impact is profound,” according to a new NCRC report “as these gaps hinder our ability to understand who is receiving loans and under what terms, which is vital for assessing fairness and inclusivity.”

To help fight the problem, the NCRC has pledged to never again use any data that doesn’t include demographics on race. “Beginning with this report, NCRC is eliminating records without demographic data from our calculations of the percent of loans made to specific races.” 

The NCRC and others say the missing data is largely due to loopholes in the HMDA. Passed in 1975, the HMDA rule requires that in-person and phone applicants provide demographic data - but online applicants can opt out.

Third-party loan purchasers are not required to track demographic information. Seven of the top 10 loan-purchasing institutions from 2023 used a loophole that allows them to erase borrower demographic data on the mortgages they bought, according to an NCRC report. “A few years ago, it was rare for lenders to buy loans and strip demographic data, but Citibank pioneered this practice. Now, many lenders who purchase loans use this loophole.” Citi declined to comment.

The NCRC report shows “in what might be a sign of a historic point” that Hispanic lending for home loans -16.5% of all 2023 home purchases - was nearly identical to their overall share of the U.S. adult population. Black borrowers' lending rates improved, though not near to their overall share of the population.

Unfortunately, these seemingly positive trends are difficult to confirm because of the incomplete data. Any increase in data collection about borrowers comes with increased risk of invasion of privacy. Though the CFPB says there’s low, if any, privacy risk in the HMDA, a 2017  report  by economist Anthony Yezer stated concerns such data collection could lead to widespread violations of privacy.

To the NCRC. “The extensive benefits of detailed data collection, encompassing income, race, sexual orientation and gender identity, decisively outweigh any concerns over burden or privacy. It’s imperative t hat efforts to curtail this essential data collection be recognized as not just misguided but as detrimental to the health and well-being of our communities.”

Read the October 4, 2024 Yahoo Finance article.

Read the October 3, 2024 Fortune article.