Bank Makes $13M Deal to End Newark ‘Redlining’ Case

However, Lakeland did agree to create a multi-million dollar subsidy loan program and guarantee equal opportunities to obtain credit and other financial services regardless of where people live or their race, according to U.S. Attorney Philip R. Sellinger for New Jersey.

Federal authorities were prepared to prosecute Lakeland Bankcorp Inc. for allegedly failing, between 2015 and 2021, to give mortgages, loans, or credit to people in Newark’s Black and Hispanic neighborhoods, and minority neighborhoods in Essex, Somerset and Union counties.

That discriminatory practice, known as “redlining,” intentionally denies loans and other financial services to people based on race, national origin, or ethnic makeup of neighborhoods where they live, federal authorities said.

Newark Mayor Ras Baraka said Lakeland’s settlement “sends a powerful message to any financial institution that continues to withhold loans in minority neighborhoods. We must hold those who engage in racist practices accountable, and the Justice Department displayed this strong message through its action.”

Money that Lakeland Bank sets aside could provide “hundreds of mortgages (and will) supplement the city’s efforts to increase homeownership at a time when such costs have gone up dramatically, putting owning a home out of reach to many Newark residents,” the mayor said.

“To deny people, specifically in Black and Latino neighborhoods in Newark, mortgage-lending services, based strictly on their race, robs and erodes their American dream of homeownership. It impedes families from building generational wealth, and widens the racial wealth gap,” Baraka said.

The $13 million “redlining” settlement is one of the largest the U.S. Department of Justice ever secured, Sellinger said. Lakeland Bank is a subsidiary of Oakland-based Lakeland Bancorp, Inc. It currently has total assets of $10 billion and more than 50 branches in New Jersey and New York.

Under its deal with federal authorities, Lakeland Bank has agreed to:

● Provide at least $12 million in a loan subsidy fund for residents of Black and Hispanic neighborhoods in the Newark area.

● Set aside $750,000 for advertising, outreach and consumer education; and $400,000 for the development of community partnerships to provide services that increase access to residential mortgage credit.

● Open two new branches in neighborhoods of color, including one in Newark.

● Assign four or more mortgage loan officers to serve all neighborhoods in and around Newark.

● Hire a full-time “community development officer” to oversee the development of loans and financial services in neighborhoods of color in the Newark area.

Shara – the top executive for Oakridge-based Lakeland Bankcorp – said “this resolution avoids the distraction of protracted litigation,” adding his institution “fully cooperated” with federal investigators, and “remains confident that we have been fully compliant with all fair-lending laws.”

Federal authorities have submitted a proposed consent order, outlining details of the Lakeland Bankcorp settlement, to the U.S. District Court in Newark for its required approval.

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published this page in News and Politics 2022-10-05 02:38:28 -0700