DOEREN MAYHEW Continued from page 3
Low Numbers of Home Loan Applications
Only 5 % of the 16,324 HMDA-reportable mortgage applications Citadel generated from 2017 through 2021 came from residents of majority Black and Hispanic areas . By contrast during the same time , its peers generated nearly three times the number of applications , averaging 13 % from these neighborhoods .
Disproportionately Low Numbers of Home Loans
Citadel only had 3 % of its 9,473 HMDA-reportable residential mortgage loans attributed to residents of Black and Hispanic areas during the violation times , 7 % lower than its peers .
Failed to Address Known Redlining Risk
A 2016 report from a third-party vendor retained by Citadel to analyze its market performance clearly depicted that it trailed other lenders in mortgage applications from Black and Hispanic residents in its market area . The report indicated only 9 % of its mortgage applications were from minority applicants , compared to 20 % of applicants at other credit unions , 15 % at banks and 15 % at all other lenders . It also confirmed the credit union trailed other lenders in mortgage applications in these residential areas in each county within the market area . Despite its known redlining risk , Citadel took no action in response to this report indicating it was underserving minority borrowers within its market area .
Actionable Stipulations
As a result of its alleged redlining , the DOJ stipulated that Citadel conduct the following :
• Community Credit Needs Assessment : Perform a research-based market study to help it identify the needs for financial services in its market area . The assessment must include information about majority Black and Hispanic census tracts within the market areas recent demographic , socioeconomic , language data and potential strategies to provide residential mortgage products and lending services in these areas . In addition , the assessment must address the potential need to provide marketing materials and loan origination materials in Spanish , and an assessment of potential appropriate locations for new branches in majority Black and Hispanic within Philadelphia County .
• Fair Lending Compliance Assessment : Select and retain an independent , qualified third-party fair lending compliance consultant to conduct a detailed assessment of its fair lending program as it relates to obligations and lending in majority Black and Hispanic census tracts . It must also draft a fair lending status report and compliance plan .
• Fair Lending Training and Distribution of the Complaint and Consent Order : Provide an electronic copy of the complaint and consent order to all employees with substantive involvement in mortgage lending , marketing or fair lending , or who have management responsibility over such employees , such as senior management with fair lending and marketing oversight ; and members of the board of directors . The individuals must be provided live and interactive training on the obligations under the Equal Credit Opportunity Act , Regulation B and the Fair Housing Act and the Consent Order . The training must also cover redlining and the allegations in the complaint .
• Community Lending Officer and Chief Compliance Officer : Hire or designate an employee for a new full-time position of Community Lending Officer , who must help develop its lending in majority Black and Hispanic areas , particularly in Philadelphia County . They also need to hire or designate an employee as Chief Compliance Officer with the responsibility of overseeing compliance with the consent order .
• Physical Expansion to Majority Black and Hispanic Census Tracts : Open or acquire three additional fullservice branches located in Black and Hispanic census tracts in Philadelphia County . The full-service branches must be in retail-oriented spaces in visible locations , have signage visible to the general public , provide a range of products and services similar to the other branches , maintain hours of operations reasonably consistent with other branches and other financial institutions in the vicinity , and accept first-lien mortgage loan applications .
04 | VIEWPOINTS : REGULATORY COMPLIANCE EDITION