REDLINING ENFORCEMENT ACTIONS remain prominent in the fair lending realm. Most recently, the U.S. Department of Justice (DOJ) reached an agreement with an Indiana state-chartered bank to settle a redlining lawsuit alleging that the bank’s mortgage lending practices excluded majority-African American/Black census tracts.
Further, the bank had no branches located in those tracts, but its lending policy
favored customers within its branch footprint.
On top of the public consent orders, newspaper articles about housing trends continue to imply that
banks are not making loans to majority minority census tracts. For example, a recent headline in the Wall
Street Journal claimed that African American homeownership had dropped to an all-time low. With the
Consumer Financial Protection Bureau (CFPB) poised to release the public HMDA data soon, we are
likely to continue seeing similar headlines.
So what is a responsible banker to do? We review our HMDA data to determine where we have risks.
And perhaps delve into what might be causing disparities. But regulator expectations are increasing for
how that analysis is performed. This article will provide some ideas on how you can strengthen your
fair lending redlining program.
BY KAT SANCHEZ
The Next Gen Root Cause Analysis
to Prevent Redlining