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The CFPB and DOJ allege that Trustmark discriminated against Black and Hispanic neighborhoods by deliberately not marketing, offering, nor originating home loans to consumers in majority-Black and Hispanic neighborhoods in the Memphis metropolitan area. The CFPB and DOJ also allege that Trustmark discouraged consumers residing in or seeking credit for properties located in these neighborhoods from applying for credit.
If entered by the court, the settlement would require Trustmark to put $3.85 million into a loan subsidy program for impacted neighborhoods, increase its lending presence there, and implement proper fair-lending procedures. The order would also impose a $5 million civil money penalty against the bank, and will credit the $4 million penalty collected by the OCC toward satisfying this amount.
“Trustmark purposely excluded and discriminated against Black and Hispanic communities,” CFPB Director Rohit Chopra said. “The federal government will be working to rid the market of racist business practices, including those by discriminatory algorithms.”
Trustmark is a national bank headquartered in Jackson, Miss., with 196 branches in five southern states. It currently operates 22 branches in the Memphis metropolitan area. This matter arose from the OCC’s examination that identified potential redlining, resulting in investigations by the CFPB and DOJ.
“Lending discrimination runs counter to fundamental promises of our economic system. When people are denied credit simply because of their race or national origin, their ability to share in our nation’s prosperity is all but eliminated,” said Attorney General Garland. “Today, we are committing ourselves to addressing modern-day redlining by making far more robust use of our fair lending authorities. We will spare no resource to ensure that federal fair lending laws are vigorously enforced and that financial institutions provide equal opportunity for every American to obtain credit.”
“The OCC has had a long history of strong partnership with the DOJ’s Housing and Civil Enforcement Section of the Civil Rights Division, referring potential fair lending violations and sharing our extensive examiner, economist, and legal findings, as we did in the Trustmark matter,” Acting Comptroller of the Currency Michael J. Hsu said. He said the "announcement is important because it signifies the unified and unmitigated focus that each of our agencies has placed on the enforcement of the Fair Housing Act and the Equal Credit Opportunity Act. Our collective efforts are critical to addressing the discriminatory lending practices that create and reinforce racial inequity in the financial system.”
The joint complaint alleges that the bank avoided locating branches in majority-Black and Hispanic communities. According to the complaint, from 2014 and 2018, only four of the bank's 25 branches in the Memphis metropolitan area were located in majority-Black and Hispanic communities, although 50% of the census tracts in the Memphis MSA are majority-Black and Hispanic. Two of the branches were established or acquired in majority-white neighborhoods in Memphis and are only now in majority-Black and Hispanic neighborhoods because of shifting demographics. Trustmark also closed its only limited-service branch located in a majority-Black and Hispanic neighborhood in the Memphis MSA in 2015.
The complaint also alleges that Trustmark avoided assigning loan officers to majority-Black and Hispanic communities, failed to monitor its fair lending compliance, and discouraged applicants and prospective applicants in the aforementioned communities.