The U.S. Department of Housing and Urban Development (HUD) and the US Department of Justice (DOJ) announced this week that this is the case secured a $15 million brokerage deal with based in New Jersey OceanFirst Bank to resolve allegations of discriminatory redlining in certain neighborhoods with predominantly 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 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 supervisor.”
The initial complaint alleged that the bank “engaged in redlining by limiting access to credit and mortgage lending services in predominantly Black, Hispanic and Asian neighborhoods in the New Brunswick, New Jersey region,” adding that the 2018 alleged activity lasted until 2022. .
In one statementOceanFirst Chairman and CEO Christopher Maher said the agreement is in line with the bank’s long-standing track record.
“The commitments we are announcing today are consistent with our bank’s 122-year history of providing lending 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 has failed to provide mortgage loans to predominantly Black, Hispanic and Asian neighborhoods in Middlesex, Monmouth and Ocean counties.” More specifically, it is alleged that the bank “acquired and then closed branches and loan production offices in these neighborhoods, which, combined with inadequate marketing efforts and fair lending policies, resulted in OceanFirst’s failure to meet the needs of these neighborhoods.”
OceanFirst voluntarily agreed to resolve the complaint and HUD issued no findings regarding the allegations.
The agreement calls for OceanFirst to invest $14 million “in a loan subsidy fund for the purpose of expanding access to credit for home mortgages, home improvement loans and home refinancing loans” in minority-dominated neighborhoods. The bank must also spend at least $400,000 on professional services in these areas to strengthen access to mortgage credit through community-based lending services.
OceanFirst agreed to spend at least $140,000 a year, or $700,000 total, on “advertising, outreach, consumer financial education and credit counseling in these neighborhoods.” It must maintain a full-service branch that initially opened in December 2023, open a loan production office in these neighborhoods, and “hire at least two full-time loan officers to process mortgage applications primarily in the predominantly Black, Hispanic and Asian neighborhoods in the New Brunswick area.”
The bank will also hire a full-time community lending director; offering 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 each year “to cover credit counseling, financial literacy, or other related financial education for consumers.”
“This settlement, and the more than $137 million in relief the Department of Justice has secured for communities across the country, will help ensure that future generations of Americans inherit a legacy of homeownership that has too often been denied to them,” the statement said. U.S. Attorney General Merrick. Garland said in a statement.
“Redlining is illegal, harmful and wrong. The Department of Justice will continue to hold banks and mortgage companies accountable for redlining and provide relief to the communities that continue to be harmed by these discriminatory practices.”
Last month, OceanFirst entered into an acquisition agreement Garden State Home Loans Inc.which will become a new division for the regional depository bank.
