The U.S. Department of Justice (DOJ) announced an agreement to resolve allegations that Lakeland Bank engaged in a pattern or practice of lending discrimination by “redlining” in the Newark metropolitan area, including neighborhoods in Essex, Somerset and Union counties in New Jersey.
The DOJ said the settlement is the third-largest redlining settlement in department history. As part of the settlement, Lakeland agreed to invest $12 million in a loan subsidy fund for residents of Black and Hispanic neighborhoods in the Newark area; $750,000 for advertising, outreach and consumer education; and $400,000 for development of community partnerships to provide services that increase access to residential mortgage credit.
“Financial institutions that refuse to provide mortgage lending services to communities of color not only contribute to the persistent racial wealth gap that exists in this country, but also violate federal law,” Attorney General Merrick Garland said in a release. “The agreement with Lakeland represents the Justice Department’s continued commitment to addressing modern-day redlining, and to ensuring that all Americans have equal opportunity to obtain credit, no matter their race or national origin.”
The proposed consent order is subject to court approval by the U.S. District Court for the District of New Jersey.
“Ending redlining is a critical step in our work to close the widening gaps in wealth between communities of color and others,” Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division said. “This settlement demonstrates our firm commitment to combating modern day redlining and holding banks and other lenders accountable when they deny people of color equal access to lending opportunities. Through this agreement, we are sending a strong message to the financial industry that we will not stand for discriminatory and unlawful barriers in residential mortgage lending.”
Lakeland also agreed to open two new branches in neighborhoods of color, including at least one in the city of Newark; ensure at least four mortgage loan officers are dedicated to serving all neighborhoods in and around Newark; and employ a full-time community development officer who will oversee the continued development of lending in neighborhoods of color in the Newark area.
The bank also will maintain an expanded Community Reinvestment Act Assessment Area that includes Essex, Somerset and Union counties.
“Redlining creates an unequal playing field that unfairly prevents many persons of color from achieving the dream of home ownership, and this type of systemic and intentional discrimination cannot and will not be tolerated,” U.S. Attorney Philip Sellinger for the District of New Jersey said. “It is wholly unacceptable that redlining persists into the 21st Century, and this case demonstrates our commitment to combating redlining and hold banks and others accountable when they engage in unlawful discrimination. Through this agreement, we are taking a major step forward by removing unlawful and discriminatory barriers in residential mortgage lending.”