Park National Bank to pay $9M to settle redlining allegations
Ohio-headquartered Park National Bank will pay $9 million under a settlement with the U.S. Department of Justice (DOJ) to resolve allegations that it discriminated against Black and Hispanic neighborhoods in the Columbus area.
The complaint, filed in federal court in the U.S. District Court for the Southern District of Ohio last month, alleged that Park National failed to provide mortgage lending services by redlining majority-Black and Hispanic neighborhoods in the Columbus area from at least 2015 to 2021.
Redlining is an illegal practice in which lenders avoid providing credit services to individuals living in communities of color because of the race, color or national origin of the residents in those communities.
Specifically, the complaint alleges that all of Park National’s branches and mortgage lenders in the Columbus area were concentrated in majority-white neighborhoods.
“When banks fail to provide equal access to lending services in neighborhoods of color, they engage in modern day redlining and exacerbate the racial wealth gap in our country,” Kristen Clarke, assistant attorney general of the Justice Department’s civil rights division, said in a statement.
The DOJ also claims that the bank failed to take any meaningful measures to compensate for its lack of physical presence in majority-Black and Hispanic communities.
Under the proposed consent order, Park National agreed to invest at least $7.75 million in a loan subsidy fund to increase access to credit for home mortgage, improvement, and refinance loans, as well as home equity loans and lines of credit, in majority-Black and Hispanic neighborhoods in the Columbus area.
The Ohio bank will invest $750,000 in outreach, advertising, consumer financial education and credit counseling activities. It will also allocate $500,000 to go toward developing community partnerships to provide services that expand access to residential mortgage credit for residents of majority-Black and Hispanic communities.
Park National Bank didn’t respond to requests for comment.
The Justice department launched an initiative to combat redlining in October 2021, and the department has since announced six redlining cases and settlements. In total, the DOJ secured $84 million in relief for communities of color across the country that have been victims of lending discrimination.
The largest settlement in the DOJ’s history was a $31 million settlement with California-headquartered City National Bank. The bank was accused of the illegal practice of avoiding the provision of mortgage services to majority-Black and Hispanic neighborhoods.
According to the DOJ, City National opened only one branch in majority-Black and Hispanic neighborhoods in Los Angeles compared to 11 in other neighborhoods from 2017 to 2020 and did not assign an employee to sell mortgage loans at that branch.