“Lenders must treat all potential borrowers equally and fairly,” said Vanita Gupta, head of the Justice Department’s Civil Rights Division and principal deputy assistant attorney general. “This settlement embodies a win-win solution for all parties by increasing the volume of mortgage loans, driving economic activity and creating a level playing field for qualified borrowers.”
The settlement, which is subject to court approval, was filed in conjunction with the department’s complaint in the U.S. District Court for the Southern District of Ohio, according to a news release. The complaint alleges that Union and Guardian violated the Fair Housing Act and the Equal Credit Opportunity Act.
The act prohibits financial institutions from discriminating on the basis of race and color in their mortgage lending practices.
The lawsuit alleges that, from at least 2010 through 2014, Union and Guardian served the credit needs of the residents of predominantly white neighborhoods to a significantly greater extent than they served the credit needs of majority black neighborhoods.
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Those neighborhoods are easily recognized because each of the four metropolitan areas in which the banks operate has long maintained highly-segregated residential housing patterns for African Americans.
As a result of the settlement, Union will open two full-service branches and Guardian will open one loan production office to serve the residents of African-American neighborhoods. The investment includes $7 million in a loan subsidy fund to increase the amount of credit that Union and Guardian give to residents of majority African-American census tracts.
The banks will further invest $2 million in advertising, outreach, financial education and community partnership efforts, according to a news release.
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