By Kimberly Chin
Trustmark National Bank parent Trustmark Corp. said it will pay $5 million to settle claims by top U.S. banking regulators that it discriminated against majority Black and Hispanic neighborhoods in the Memphis area when offering loans to consumers.
The Consumer Financial Protection Bureau, the Justice Department and the Office of the Comptroller of the Currency claimed in a joint action Friday that Trustmark deliberately didn't market, offer or originate home loans to consumers in those areas and discouraged consumers tied to these areas from applying for credit. The practice is known as redlining--when a lender denies someone a loan or credit based on where they live, often in communities of color, because it is deemed a financial risk.
"We fully cooperated with the agencies and have entered into these settlements to avoid the distraction of protracted litigation," Trustmark President and Chief Executive Duane Dewey said in a statement. "We share the common goals of breaking down barriers to home financing and exploring innovative ways to help residents of underserved areas achieve the dream of homeownership."
The bank didn't admit or deny the claims, according to the consent order.
The OCC, a federal bank regulator, said the conduct occurred between 2014 and 2016.
The lender said it has rolled out several programs to assist low- and moderate-income residents in the Memphis area and others with down payments, loan subsidies and other barriers that prevent them from qualifying for financing.
The company said $4 million of the $5 million civil penalty will go toward the OCC and $1 million will be paid to the CFPB.
As part of the settlement, Trustmark will also be required to invest $3.85 million over five years in a loan subsidy program for Memphis residents in majority Black and Hispanic communities to help boost the bank's lending in those areas. Trustmark will also set aside $200,000 annually over the same period for advertising, community outreach and financial education services and another $400,000 in community development partnerships.
Write to Kimberly Chin at email@example.com
(END) Dow Jones Newswires