Skip to main content

First National Bank of Pennsylvania Settles Redlining Charges For $13.5 Million

Feb 06, 2024
Department of Justice
News Director

Justice Department accuses major mortgage lender of discriminating against Black and Latino homebuyers in North Carolina.

A settlement has been reached between the U.S. Department of Justice and the First National Bank of Pennsylvania over discrimination against Black and Latino homebuyers in North Carolina for a minimum of four years. The bank joins a growing list of financial institutions hit with major financial penalties for redlining practices.

As part of the settlement, FNB will pay $13.5 million to resolve the redlining allegations, with a significant portion of the funds being allocated to a program aimed at subsidizing loans for Black and Latino borrowers in Charlotte and Winston-Salem, two housing markets where the DOJ identified discriminatory practices.

While FNB settled the case, a spokeswoman said the bank disagreed with the allegations but opted to settle the case to avoid prolonged litigation.

“We firmly assert First National Bank’s compliance with fair lending laws and strongly disagree with the DOJ’s allegations. We cooperated fully to reach an agreement in this inherited matter as a good faith effort to avoid prolonged litigation and to maintain our focus on promoting equity and economic prosperity,” said Jennifer M. Reel, chief communications officer for FNB. “We are also proud to further advance our existing commitment to ensure minority and low- to moderate-income borrowers have access to credit and vital banking resources.”

The bank will provide $11.75 million in mortgage loan subsidies over five years, leveraging its previously announced commitment to underserved communities across the footprint, including those located in the Charlotte and Winston-Salem markets. The settlement does not include any civil money penalties against First National Bank.

The Justice Department's complaint alleges that First National Bank closed branches located in majority-minority neighborhoods, failed to offer mortgage services to Black and Latino prospective borrowers, and disregarded entire neighborhoods for potential lending opportunities. Comparatively, the DOJ found that similar-sized lenders engaged in two to four times more lending to minority borrowers between 2017 and 2021 than FNB did.

The case stems from FNB's acquisition of Yadkin Bank, a regional bank in the Carolinas, in 2017. While FNB asserts that the discriminatory conduct occurred under Yadkin Bank's previous management, the Justice Department maintains that any acquiring bank should be held accountable for the actions of the bank it purchases.

This marks the 13th redlining settlement initiated by the Biden Administration against banks since 2021. Under the leadership of Attorney General Merrick Garland, the Justice Department has established a Redlining Taskforce focused on addressing racial discrimination in financial services, a commitment that sets this administration apart from its predecessors.

"This settlement should send a strong message to banks, mortgage companies and financial institutions across the country that redlining will not be tolerated. We are prepared to hold institutions accountable when they engage in discriminatory conduct. Banks should be on notice that they will also be held accountable for redlining activity, even when conducted by entities that they have acquired or merged with," Assistant Attorney General Kristen Clarke of the DOJ's Civil Rights Division said. 

About the author
Christine Stuart is the news director at NMP.
Feb 06, 2024
Post-Closing Challenges For Mortgage Brokers

How to navigate repurchase and clawback demands

Challenges And Solutions To Home Lending In Native American Communities Presented By NCRC

Bankers from around the nation participate in Redlining the Reservation webinar.

How Burnett v. NAR Will Impact The Mortgage Industry

Decision could make process harder for first-time buyers

FHA Announces New Rule Easing Branch Office Registration

Effective March 4, the Federal Housing Administration's updated regulation promotes broader participation in FHA programs, benefiting smaller loan originators and credit unions.

Patriot Bank Settles With DOJ Over Alleged Redlining In Memphis

Tennessee-based lender agrees to $1.9 million settlement amid allegations of discriminatory lending practices in minority neighborhoods.