branches in neighborhoods that are majority-Black and-Hispanic or assigning loan officers to only majority-White neighborhood branches. Unfair lending practices can also become more complex, especially when the institution lacks internal resources to detect compliance issues.
Cadence Bank
The Aug. 20, 2021, complaint alleges between 2013- 2017, Cadence Bank avoided providing home loans and other home mortgage services in majority-Black and-Hispanic neighborhoods in Houston, Texas. Some of the allegations include:
• Maintaining almost all its branches and loan officers in majority-White neighborhoods.
• Concentrating its outreach, advertising and marketing in majority-White areas, and avoiding majority- Black and-Hispanic areas. Cadence Bank’ s main advertising and marketing technique was through loan officers getting referrals from developers and real estate agents in the surrounding areas. The bank did not train or assist their loan officers in looking for referrals from minority neighborhoods.
• Overlooking or simply not hiring any loan officer with ties and relationships to these neighborhoods. It also did not hire anyone who could speak Spanish to provide credit services to the people in these areas.
Due to these practices, Cadence Bank had a disproportionately low number of loan applications from majority-Black and-Hispanic neighborhoods. None of these practices served a necessary, substantial, legitimate and non-discriminatory purpose. The bank was then enjoined from future violations and ordered to:
• Train staff on the Federal Housing Administration( FHA) and Consumer Financial Protection Act( CFPA).
• Submit a detailed report on their fair lending practices.
Trustmark National Bank
On Oct. 22, 2021, the Consumer Financial Protection Bureau( CFPB) and DOJ, in cooperation with the Office of the Comptroller of the Currency( OCC) took action to end alleged redlining by Trustmark National Bank.
The joint complaint alleges Trustmark National Bank violated the Fair Housing Act( FHA), Equal Credit Opportunity Act( ECOA) and the Consumer Financial
Protection Act of 2010( CFPA). Additionally, the complaint alleges the bank violated Regulation B, which implements the Equal Credit Opportunity Act. The laws and regulation violated prohibit creditors from discriminating against applicants and prospective applicants in credit transactions based on race, color and national origin.
The alleged redlining occurred in the Memphis metropolitan area, where the bank had 25 branches, between 2014 and 2018. Per the United States Census Bureau, in 2018 this region was majority-Black and-Hispanic, accounting for 45.8 % and 5 %, respectively.
Low Number of Mortgage Loans
One of the points in the complaint states the bank made a disproportionately low number of mortgage loans in minority neighborhoods in the Memphis metropolitan area. While the bank made 2,369 HMDA-reportable residential mortgage loans in this area, only 8.3 % were made in majority-Black and-Hispanic neighborhoods. However, its similarly situated peers made 42,714 HMDAreportable residential mortgage loans in the same area, with 19 % going to residents of minority neighborhoods. When the disparities were calculated annually during this time period, the bank’ s peers made loans between 1.65 and 3.35 times that rate. The complaint categorizes this as a“ statistically significant failure by the bank, relative to its peer lenders, to make home loans and provide mortgagee residential mortgage services to residents of, and those seeking credit for properties located in, majority-Black and-Hispanic census tracts in Memphis on a non-discriminatory basis” during the time period.
Branch Locations
Allegedly the bank avoided locating branches in majority- Black and-Hispanic neighborhoods and assigning loan officers to these neighborhoods. Of their 25 branches in the Memphis area, only four were located in these neighborhoods. Three of those four branches were classified as full-service that accepted residential mortgage loan applications. Only two full-service branches were located in these minority neighborhoods, which were established or acquired when the surrounding neighborhoods were majority-White before shifting demographics.
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