Lakeland Bank in New Jersey will pay $13 million in a lawsuit over racial discrimination.
According to NJ.com, the bank was accused of redlining from 2015 to 2021. Redlining is when banks systematically refuse to lend money or extend credit to Black and Latino families who are either first-time homeowners or seeking to keep their homes. In the past, lenders would draw a red line around specific neighborhoods on a map where they wanted only people of a certain race or socioeconomic background to reside.
The U.S. Attorney’s Office for New Jersey said in a consent order, “Lakeland avoided serving the credit needs of borrowers in majority Black and Hispanic census tracts in the Newark (area) and discouraged borrowers in majority Black and Hispanic census tracts in the Newark (area) from obtaining mortgage loans, while acting to serve the credit needs for mortgage loans in majority white census tracts.”
U.S. Attorney for New Jersey Phillip Sellinge released a statement reading, “If you lived in a Black or Hispanic neighborhood you likely had little opportunity to apply for let alone obtain a loan from Lakeland bank. This form of discrimination has been barred by law for decades but still exits today. There were qualified buyers — Lakeland just didn’t service them.”
Sellinge added, “The avoidance went beyond brick and mortar locations. Lakeland unlawfully avoided serving neighborhoods that were Black or Hispanic while serving nearby white majority suburbs.”
Lakeland’s attorneys have not responded to a request for comment, according to NJ.com. However, as part of the settlement, Lakeland Bank admitted to no wrongdoing. That said, the bank will invest a minimum of $12 million in a loan subsidy fund for people in majority Black and Hispanic areas and will train employees on fair lending practices. The bank will also open two locations in Black or Hispanic areas. A branch will open in Newark, which is 49.5% Black. The current Lakeland banks have no locations in neighborhoods of color.