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The U.S. Department of Justice<\/strong> (DOJ) this week announced that it had secured a settlement of more than $3 million from Philadelphia, Penn.-based ESSA Bank & Trust<\/strong> over allegations that the company engaged in redlining majority Black and Hispanic communities from access to credit services around the Philadelphia area.<\/p>\n According to a complaint<\/a> filed by DOJ in the U.S. District Court for the Eastern District of Pennsylvania<\/strong>, ESSA \u201cfailed to provide mortgage lending services and did not serve the credit needs of majority-Black and Hispanic neighborhoods in the Philadelphia metropolitan area\u201d from 2017 to 2021.<\/p>\n \u201cFor too long, residents of communities of color have been unlawfully denied equal access to credit and shut out of economic opportunities,\u201d said Assistant Attorney General Kristen Clarke of the DOJ Civil Rights Division in the DOJ announcement<\/a>. \u201cWhen banks engage in redlining, they perpetuate existing patterns of segregation and widen the racial wealth gap in our country. This resolution makes clear our commitment to holding banks and financial institutions accountable for modern-day redlining while ensuring access to fair lending in communities of color.\u201d<\/p>\n Under a consent order<\/a> still subject to court approval, ESSA has agreed to invest $2.92 million in a designated loan subsidy fund designed to increase access to credit for home mortgage, improvement and refinance loans, as well as home equity loans and lines of credit, in majority-Black and Hispanic neighborhoods within the bank\u2019s lending area.<\/p>\n ESSA has also agreed to spend $125,000 on community partnerships and $250,000 on advertising, outreach, consumer financial education and credit counseling to the impacted communities specified in the complaint and consent order.<\/p>\n \u201cThe consent order also requires the bank to hire two new mortgage loan officers to serve its existing branches in West Philadelphia and conduct a research-based market study to help identify the needs for financial services in communities of color,\u201d the DOJ added.<\/p>\n In a statement announcing the settlement, ESSA \u201ccategorically denies violating any fair lending laws or engaging in \u2018redlining,\u2019\u201d according to a press release<\/a>.<\/p>\n \u201cESSA and its Board of Directors believe this is a constructive resolution to a dispute that has lasted several years,\u201d said Gary Olsen, ESSA\u2019s president and CEO. \u201cIt is consistent with our guiding principles and longstanding commitment to provide equal lending opportunities to all of the communities we are privileged to serve. We plan on using these loan subsidy funds to expand opportunities for qualified borrowers who can benefit from this assistance. We\u2019re happy and pleased to help families purchase homes. It is simply the right thing to do.\u201d<\/p>\n Olsen added that during the the time period covered by the government\u2019s complaint, \u201cESSA did not receive a single fair lending complaint from any customer or potential customer.\u201d He also said that the company opened a branch and business center in downtown Allentown, \u201cin a majority minority census tract.\u201d<\/p>\n DOJ opened the investigation into ESSA after being referred by the Federal Deposit Insurance Corporation<\/strong> (FDIC).<\/p>\n \u201cESSA fully cooperated with the department\u2019s investigation and worked expeditiously to resolve these allegations,\u201d DOJ said.<\/p>\n ESSA’s redlining settlement agreement is the latest in a series of cases brought by the DOJ. In January, Los Angeles-headquartered City National Bank<\/strong> agreed to pay $31 million to settle a case that alleged it avoided providing mortgage services to majority Black and Hispanic neighborhoods between 2017 and 2020. <\/p>\n In July, the DOJ and the\u00a0Consumer Financial Protection Bureau<\/strong>\u00a0announced a $24.4 million\u00a0consent order<\/a>\u00a0with\u00a0Trident Mortgage Co<\/strong>., a subsidiary of Warren Buffet\u2019s Berkshire Hathaway. In September, the DOJ also reached a $12 million-plus\u00a0settlement\u00a0with\u00a0Lakeland Bank<\/a>\u00a0<\/strong>over claims the lender engaged in redlining in the Newark, New Jersey metropolitan area.<\/p>\n