Patriot Financial institution in Millington, Tennessee, agreed to pay $1.9 million to resolve allegations that it engaged in lending discrimination by redlining majority-Black and Hispanic neighborhoods in Memphis, the Justice Division mentioned in a
The DOJ alleged that, from 2015 by way of not less than 2020, the $460 million-asset Patriot averted offering mortgage companies to majority-Black and Hispanic neighborhoods in Memphis and discouraged individuals in search of credit score in these communities from acquiring house loans. Over the identical six-year interval, different banks obtained practically 3.5 occasions as many mortgage functions in comparison with Patriot in the identical neighborhoods, the DOJ mentioned.
The DOJ mentioned Patriot cooperated with its investigation. John Smith, president and CEO of Patriot Financial institution, mentioned in a press release offered to American Banker that the financial institution has an extended historical past of serving all areas of Memphis and denied the DOJ’s allegations.
“Patriot Financial institution has at all times acted to serve the house mortgage credit score wants in minority neighborhoods, and the financial institution’s robust document speaks for itself and flatly contradicts any allegation of wrongdoing,” Smith mentioned. “We’re pleased with our document and strongly deny that Patriot Financial institution ever averted originating house mortgage loans in Black and Hispanic areas of the Memphis market.”
The financial institution mentioned within the assertion that it entered into the consent order with the DOJ “as a result of the phrases of the settlement affirm and undertake the packages and actions that the financial institution has already been implementing by itself for a few years to assist meet mortgage credit score wants within the communities it serves, together with its funding of $1.9 million in reaching and serving communities of colour, because the consent order itself states.”
Patriot mentioned it ranked 14th out of 482 lenders in making mortgage loans in minority areas of Memphis in 2021 and fifteenth out of 534 lenders in 2022.
Amongst different efforts, the financial institution mentioned it most just lately partnered with a number one neighborhood improvement group and the Metropolis of Memphis to finance a residential subdivision in a low-income and Black neighborhood in South Memphis.
The proposed consent order, which is topic to court docket approval, requires Patriot to speculate the $1.9 million to extend credit score alternatives for communities of colour in Memphis.
Particularly, the financial institution should make investments not less than $1.3 million in a mortgage subsidy fund to extend entry to house loans for residents of majority-Black and Hispanic neighborhoods and spend one other $375,000 for promoting, outreach, shopper monetary schooling and credit score counseling. It is also required to speculate $225,000 on neighborhood partnerships to supply companies that improve mortgage entry for residents of these neighborhoods.
The order additionally requires the financial institution to have not less than two mortgage officers devoted to serving majority-Black and Hispanic neighborhoods in Patriot’s service space, and make use of a director of neighborhood lending to supervise the continued improvement of lending in communities of colour.
The DOJ mentioned it opened its investigation into Patriot’s lending practices after receiving a referral from the Federal Reserve, the federal financial institution’s regulator.
A handful of lenders have confronted redlining allegations from the DOJ over the previous couple of years. In October,
The DOJ mentioned within the press launch on Wednesday that the company has negotiated $109 million in reduction in 11 redlining instances since 2021.