Patriot Bank recently agreed to pay nearly $2 million in response to allegations that they’d participated in redlining, according to a new report by the Justice Department.
Announced in a press release, the bank will now reportedly invest approximately $1.9 million to create credit opportunities for residents in Black and Hispanic communities in Memphis.
Through the investment, $1.3 million will be devoted to providing home mortgages and other home improvement opportunities to people living in majority Black and Hispanic neighborhoods. The rest of the finances will be used to provide credit counseling and create community relationships based on credit access.
As part of the agreement, the bank will also reportedly devote two mortgage loan officers to serve only residents of majority-Black and Hispanic neighborhoods and will include a Director of Community Lending who will focus on increasing financial opportunities for members of BIPOC communities.
The reported actions of the bank come in response to the Department of Justice accusing the bank of refusing to give services to Black and Hispanic residents who were looking for mortgages.
From 2015 to 2020, Patriot disproportionately gave a majority of their mortgaging services to white residents. Compared to other banks in the city, Patriot filed lower rates of applications from majority-Black and Hispanic neighborhoods with rates falling down to approximately 3.5 times less than nearby banks.
Today, the Justice Department announced that its Combating Redlining Initiative has surpassed $100 million in relief for communities of color nationwide that have experienced financial discrimination.
— U.S. Department of Justice (@TheJusticeDept) October 19, 2023
Full Release: https://t.co/3ktniyosho pic.twitter.com/gQJ3McIjp8
“For too long, practices like redlining and discriminatory lending have been used to undermine the promises of our economic system,” said U.S. Attorney Kevin G. Ritz, per the press release. “Our office is committed to enforcing fair lending laws and ensuring that banks and lenders are providing communities of color equal access to credit and lending opportunities.”
The announcement of the settlement comes months after the DOJ settled redlining allegations with Ameris Bank. The bank agreed to pay approximately $9 million after it was accused of violating the Fair Housing Act and Equal Credit Opportunity Act, denying mortgages to BIPOC communities in Florida.
The case was the 10th case to be settled by the DOJ as part of their redlining initiative which has obtained $107 million in total so far.
Throughout the years, redlining has been prominent in U.S. history. Originating in the 1930s, the process initially began with the emergence of the Federal Housing Administration.
The administration enforced guidelines that prevented providing housing assistance to Black Americans and reinforced housing segregation, creating boundaries between majority-Black and majority-white neighborhoods that persist to this day.
In a 2020 report, the National Community Reinvestment Coalition reported that approximately 8.25 million people continue to live in redlined communities that were developed during this time.
“Taken in total, in 2020—80 years after the HOLC participated in standardizing racially based appraisal methods and described redlined areas—the impact of residential segregation persists,” wrote the researchers in their report. “Redlining imposed barriers to the flow of capital in many low-income neighborhoods, and in Black and other minority communities, creating the circumstances for long-term racial segregation.”
