On July 29, 2019 the U.S. Department of Housing and Urban Development (HUD) announced its approval of an agreement between the California Reinvestment Coalition (CRC) and OneWest Bank. This complaint settles allegations by CRC that the bank discriminated against minority communities in the Los Angeles metropolitan area.

The complaint filed with the HUD in 2017 alleged the bank avoided marketing and originating home mortgages in majority-minority census tracts, a form of Fair Lending discrimination known as redlining. This assertion was supported by CRC’s analysis of OneWest’s lending practices in the market, which showed the bank was less likely to take applications from majority-minority census tracts. Furthermore, the CRC identified the location of the bank’s branches as additional evidence that the bank avoided serving minority communities.

The settlement of these redlining allegations will require OneWest Bank to:

  • Open or acquire a full-service retail branch in a majority-minority and low- to moderate-income census tract in its assessment area;
  • Launch an affordable home mortgage program to originate $100 million in mortgage loans and offer discounts or subsides totaling $5 million to borrowers in majority-minority census tracts located in its assessment area;
  • Provide $1 million to support community development, counseling and related activities consistent with requirements under the Community Reinvestment Act (CRA);
  • Invest $1.3 million in marketing and outreach initiatives to promote its services and affordable home mortgage program to consumers in majority-minority census tracts; and
  • Require Fair Lending training among the bank’s employees.

An interesting aspect regarding this complaint and resulting settlement is that it was initiated by a local community organization, the CRC, rather than via a redlining examination by OneWest’s supervisory agency (i.e., the Office of the Comptroller of the Currency, or OCC). The growing availability of data and technology combined with digital media platforms, including social media, allows organizations like the CRC to monitor lending patterns in their communities for discrimination and to amplify their message at relatively little cost. The additional data elements required under the 2015 Home Mortgage Disclosure Act (HMDA) rule will make even more data available to the public for analysis.

This paradigm is why we assist our clients in analyzing their publicly-available data to proactively identify lending and branching patterns presenting Fair Lending risk that could be evidenced by any community stakeholder.