HousingWireHousingWire
The U.S. Department of Housing and Urban Development (HUD) and the U.S. Department of Justice (DOJ) announced this week that they have secured a $15 million conciliation agreement with New Jersey-based OceanFirst Bank to settle allegations of discriminatory redlining in certain neighborhoods with majority Black, Hispanic and Asian populations.
“Redlining is an illegal practice in which lenders avoid providing credit services to individuals living in communities of color because of the race, color, or national origin of the residents in those communities,” HUD said in its announcement. “HUD’s investigation was conducted alongside the [DOJ] after a referral from the Office of the Comptroller of the Currency (OCC), the bank’s regulator.”
The initial complaint alleged that the bank “engaged in redlining by restricting access to credit and mortgage lending services in majority-Black, Hispanic, and Asian neighborhoods in the New Brunswick, New Jersey area,” adding that the alleged activity persisted from 2018 to 2022.
In a statement, OceanFirst Chairman and CEO Christopher Maher said that the agreement is in line with the bank’s longstanding track record.
“The commitments we are announcing today are consistent with our bank’s 122-year history of providing credit and other financial services to all residents of the communities we serve,” he said. “We look forward to continuing the Bank’s efforts in the New Brunswick-Lakewood market to help meet the lending and banking needs of families, businesses, schools and organizations.”
The complaint alleges that “OceanFirst failed to provide mortgage lending services to predominantly Black, Hispanic, and Asian neighborhoods in Middlesex, Monmouth, and Ocean Counties.” More specifically, it alleges that the bank “acquired and subsequently closed branches and loan production offices in these neighborhoods, which, coupled with its insufficient marketing efforts and fair lending policies, led to OceanFirst failing to serve the needs of these neighborhoods.”
OceanFirst voluntarily agreed to resolve the complaint and HUD issued no findings related to the allegations.
The agreement dictates that OceanFirst will invest $14 million “in a loan subsidy fund with the goal of increasing access to credit for home mortgage loans, home improvement loans, and home refinance loans” in minority-dominant neighborhoods. The bank also must spend at least $400,000 on professional services in these areas to bolster access to mortgage credit through community-based credit services.
OceanFirst agreed to spend at least $140,000 per year, or $700,000 in total, on “advertising, outreach, consumer financial education, and credit counseling in these neighborhoods.” It must maintain a full-service branch initially opened in December 2023, open a loan production office in these neighborhoods, and hire “at least two full-time loan officers to solicit mortgage applications primarily in majority-Black, Hispanic, and Asian neighborhoods in the New Brunswick area.”
The bank will also hire a full-time director of community lending; provide at least four outreach programs per year for its services to reach these neighborhoods; and provide at least six consumer education seminars in these areas every year “to cover credit counseling, financial literacy, or other related consumer financial education.”
“This settlement, and the over $137 million in relief the Justice Department has secured for communities across the country, will help to ensure that future generations of Americans inherit a legacy of home ownership that they have been too often denied,” U.S. Attorney General Merrick Garland said in a statement.
“Redlining is unlawful, it is harmful, and it is wrong. The Justice Department will continue to hold banks and mortgage companies accountable for redlining and to secure relief for the communities that continue to be harmed by these discriminatory practices.”
Last month, OceanFirst struck a deal to acquire Garden State Home Loans Inc., which will become a new division for the regional depository bank.
