On June 2, the U.S. District Court for the Eastern District of Pennsylvania terminated a 2022 consent order and dismissed with prejudice the CFPB and DOJ's redlining lawsuit against a nonbank mortgage lender. The motion to terminate the consent order, filed jointly by the CFPB and DOJ, asserted that the company had fulfilled its monetary and injunctive obligations under the order.
The underlying complaint alleged that the lender violated the Equal Credit Opportunity Act (ECOA), Regulation B, the Consumer Financial Protection Act (CFPA), and the Fair Housing Act (FHA) by redlining majority-minority neighborhoods in the Philadelphia metropolitan area between 2015 and 2019. The complaint alleged that the company maintained nearly all offices in majority-white neighborhoods, failed to market to communities of color, and discouraged prospective applicants on the basis of race, color, or national origin.
The 2022 consent order imposed a range of remedial measures, including funding an $18.4 million loan subsidy program, establishing a community development partnership program and a consumer financial education program, implementing targeted advertising and outreach to improve credit access to underserved communities, and pay a $4 million civil money penalty to the CFPB.
Putting It Into Practice: The termination of this consent order continues the trend of federal agencies dropping redlining enforcement actions initiated under prior leadership (previously discussed here and here). While lenders should continue to monitor for discriminatory effects in their credit operations, particularly around physical branch locations, servicing areas, and marketing efforts, this latest development suggests that federal agencies are becoming less likely to pursue redlining cases based primarily on statistical gaps alone.
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