Redlining In LA? DOJ Nets $31 Million In Home Mortgage Discrimination Settlement

City National Bank has agreed to a $31 million settlement over alleged lending discrimination — also known as redlining — against Black and Latino homebuyers in L.A. County.

In a complaint filed in federal court Thursday, the U.S. Department of Justice claimed that the bank — the largest headquartered in L.A. — avoided providing mortgage lending services to Black and Latino neighborhoods and discouraged residents from receiving the loans from 2017 through at least 2020. The order is still subject to court approval.

Money from the settlement is intended to assist impacted Black and Latino homebuyers.

The DOJ's Kristen Clark said that it's notable that this settlement is being announced just days before what would have been Dr. Martin Luther King Jr.'s 94th birthday.

"This settlement in so many respects embodies Dr. King's commitment to fighting economic injustice. And he recognized that once you tear down those barriers, when it comes to housing, that doors would be open with respect to schools, jobs, and so much more," Clark said.

Under the settlement, the bank has also agreed to open one new branch in majority Black and Latino neighborhoods, increase staffing of mortgage loan officers serving majority Black and Latino neighborhoods, and employ a community lending manager to oversee the development of lending in those neighborhoods.

"In the words of Dr. Martin Luther King Jr., the issue of fair housing is a ‘moral issue.’ Thus, ending redlining is a critical step to closing the widening gaps in homeownership and wealth, especially in a city as large and diverse as Los Angeles,” U.S. Attorney Martin Estrada said in a press release.

According to the DOJ, City National also opened just one branch in a majority-Black and Latino neighborhood in the past 20 years. It opened or acquired a total of 11 branches during that time.

In the settlement, according to the DOJ, City National Bank has agreed to invest:

• $29.5 million in a loan subsidy fund for residents of majority-Black and Latino neighborhoods in L.A. County
• $500,000 for advertising and outreach targeted toward residents in those neighborhoods
• $500,000 for a consumer financial education program to help increase access to credit for residents
• $750,000 for development of community partnerships to provide services that increase access to residential mortgage credit
• Conduct a Community Credit Needs Assessment, a research-based market study, to help identify the needs for financial services for majority-Black and Hispanic census tracts within L.A. County

The settlement comes as part of a broader initiative by the DOJ to combat redlining. Nationwide, the department said it has secured $75 million so far.