Park National Bank recently agreed to pay $9 million to settle allegations of discriminatory lending practices, also known as redlining. The accusations arose during a federal investigation of the bank by the U.S. Department of Justice and recently concluded after months of negotiations.
The redlining claims arose from disparities in the bank’s lending practices in predominantly minority neighborhoods. The areas identified as having been discriminated against were located in and around Cleveland and Columbus, Ohio. The Department of Justice alleged that Park National Bank violated the Fair Housing Act & Home Mortgage Disclosure Act which prohibit lending discrimination based on race, national origin, and other protected characteristics.
The agreement requires the bank to take a number of steps to prevent future redlining in the targeted neighborhoods. At a minimum, the bank must set aside $7 million of the settlement money over the next three years to make strategic investments in the neighborhoods. Some of the investments include offering down payment assistance, reviving home ownership and rehabilitating residential properties. In addition, approximately $1.55 million will be set aside as an additional penalty to bring the total amount to $9 million.
The settlement also includes a five-year compliance plan that involves periodic reviews of the bank’s lending practices. This includes regular reports to the Department of Justice outlining any changes to the bank’s lending practices in the neighborhoods. Park National Bank must also take steps to ensure their staff is properly trained in lending without discrimination.
This settlement serves as a reminder of the importance of fair lending practices and that discriminatory lending practices will not be tolerated. This case also demonstrates that banks can make effective and meaningful changes to their lending practices in order to foster economic growth in underserved communities.
You can read this full article at: https://www.housingwire.com/articles/park-national-bank-to-pay-9m-to-settle-redlining-allegations/(subscription required)
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