Justice Department Says It’s Tackling ‘Modern’ Redlining

(Bloomberg) – The Justice Department will prioritize reframing investigations, with Attorney General Merrick Garland promising the crackdown on discriminatory loans would be unprecedented in its aggressiveness.

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Speaking at a press briefing on Friday, Garland presented the initiative as targeting a “modern red line.” Other watchdogs at the event said it would include the use of algorithms and online data that could violate fair housing laws. The attorney general said the government had several cases pending and would likely open more investigations to find out whether minorities are being denied loans.

“The initiative represents the most aggressive and coordinated effort in the department to combat redlining,” Garland said, adding that his agency will work with the Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency and other agencies. . “Together, we will proactively seek to determine whether credit institutions are engaged in redlining.”

In a sign of renewed interest, the department took enforcement action on Friday against a unit of Trustmark Corp., alleging that the subsidiary had structured its business practices to avoid providing home loans and other mortgage services to people living in the predominantly black and Hispanic neighborhoods of the Memphis area.

From 2014 to 2018, the unit’s alleged redlining practices included having nearly all of its branches and loan officers in predominantly white neighborhoods, according to the government’s lawsuit filed in federal court in Tennessee. Without admitting or denying the allegations, Trustmark, based in Jackson, Mississippi, agreed to pay $ 5 million in penalties to the CFPB and OCC. The lender, which has $ 17 billion in assets, will also make several changes to its lending program.

Trustmark chief executive Duane Dewey said the bank had cooperated with the investigation and arranged to avoid a distraction from litigation. “We share the common goals of breaking down barriers to housing finance and exploring innovative ways to help residents of underserved areas,” he said in a statement.

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Estelle D. Eden

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