Saturday, March 19, 2016

HUD, Fair Housing Groups Squeeze Missouri Bank For $2.8 Million In Lending Concessions To Resolve Allegations It Discriminated Against Blacks When Making Home Loans

The U.S. Department of Housing & Urban Development recently announced:
  • The U.S. Department of Housing and Urban Development (HUD) announced [] an agreement with First Federal Bank of Kansas City to resolve allegations of ‘redlining’ against African American mortgage applicants. Two fair housing organizations claimed the lender’s designated service area effectively excluded African American neighborhoods, limiting residential mortgage lending to persons based upon their race. Read the HUD-mediated agreement.
    The agreement stems from two complaints filed on October 5, 2015, by the nonprofit organizations Metropolitan St. Louis Equal Housing and Opportunity Council (EHOC) and Legal Aid of Western Missouri.

    The groups alleged the bank’s lack of market penetration in African-American communities in the urban core (East Side) of Kansas City, Missouri made residential real estate products less available to people based on race. The groups also alleged that the bank designated its service area, or assessment area, in a way that excluded areas of high African American concentration, which resulted in making residential real estate products less available to persons based on race, a practice commonly known as redlining.

    As part of the HUD-mediated conciliation agreement, First Federal Bank of Kansas City agreed to provide $75,000 in discounts or subsidies on home purchase loans on owner-occupied properties in majority African American census tracts in the Kansas City metropolitan area over a three year period. In addition, the bank agreed to originate $2.5 million in mortgage loans in majority African American neighborhoods over a three year period.

    The bank also agreed to a series of important fair lending directed financial commitments:
  • $105,000 to support a loan pool that finances the rehabilitation of vacant, blighted homes in distressed areas of Kansas City;
  • $50,000 at the rate of at least $15,000 per year for three consecutive years for affirmative marketing and outreach to African American communities in the Kansas City metropolitan area;
  • $30,000 to support financial education specifically targeting majority African American communities;
  • $50,000 directly to the named complainants to support their fair lending and community reinvestment work.
Source: HUD and First Federal Bank of Kansas City Reach $2.8 Million Settlement (Agreement resolves claims of race-based lending practices).

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