The Justice Department has settled another case involving alleged redlining by real estate lenders, this time in New Jersey.
Lakeland Bank came to terms with the Department of Justice on Wednesday, the New York Times reported. The New Jersey-based bank didn’t admit wrongdoing, as is often the case in settlements.
The bank, which operates out of northern New Jersey and the Hudson Valley, agreed to create a $12 million homeownership fund. It will also open two new branches and increase mortgage lending in underserved communities of color in northern New Jersey.
Borrowers from affected communities will be eligible for up to $15,000 to make down payments, pay for closing costs or insurance, or reduce interest rates by buying points. The agreement still needs a judge’s approval.
The Justice Department investigated the bank’s practices from 2015 through last year. The federal agency accused the bank of denying or discouraging loans in some New Jersey neighborhoods on the basis of race, color or national origin, a decades-old practice known as redlining.
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The community bank operated solely out of majority-white neighborhoods, making it more challenging to fairly serve credit needs in Black and Latino communities.
Lakeland said it settled to avoid lengthy litigation. The bank, which operates 68 branches, is in the midst of a $1.3 billion merger with Provident Banks. The merger remains on track, said Provident, which knew of the pending settlement.
The Justice Department has prioritized redlining cases in recent months under its Combatting Redlining Initiative.
In July, a former mortgage lender with ties to Warren Buffett, Trident Mortgage Company, agreed to pay $20 million in the second-largest settlement of a redlining case in Department of Justice history. The company, which no longer provides lending services, will also be required to contract another lender to provide services to affected communities.
— Holden Walter-Warner