The Justice Department 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. This resolution is part of the Justice Department’s nationwide Combating Redlining Initiative and represents the third-largest redlining settlement in department history.
“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,” said Attorney General Merrick B. Garland. “The agreement with Lakeland announced today 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.”
“Ending redlining is a critical step in our work to close the widening gaps in wealth between communities of color and others,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “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.”
Newark Mayor Ras J. Baraka released a statement saying, “$12 million is hundreds of mortgages, which is important in Newark and helps supplement the City’s efforts to increase homeownership at a time when such costs have gone up dramatically, putting owning a home out of reach to many Newark residents.”
Mayor Baraka continued, “Although, redlining was banned nationwide more than 50 years ago, we know it still exists. To deny people, specifically in Black and Latino neighborhoods in Newark, mortgage-lending services, based strictly on their race, robs and erodes their American dream of homeownership. It impedes families from building generational wealth, and widens the racial wealth gap. We must hold those who engage in racist practices accountable and the Justice Department displayed this strong message through its action.”
Under the proposed consent order, which is subject to court approval and was filed today in the U.S. District Court for the District of New Jersey along with a complaint, Lakeland has agreed to do the following:
- Invest at least $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.
- 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.
- Maintain an expanded Community Reinvestment Act Assessment Area that includes Essex, Somerset and Union counties.
Lakeland has agreed to settle this matter without contested litigation and worked cooperatively with the department to remedy the redlining concerns that were identified.
