New Jersey- based Hudson City Savings Bank is set to pay $32.75 million for settlement of their federal lawsuit of mortgage discrimination.
According to nbcnews.com, Consumer Financial Protection Bureau and Justice Department said that Hudson City Savings Bank "chose mortgage brokers and marketed loans that discouraged borrowers" that are either black or Hispanic. U.S. Attorney Paul J. Fishman of the District of New Jersey said that the bank had built its business to avoid doing business with people depending on their race and national origin.
If the court approves the settlement case, Hudson City Savings Bank have to pay $2.25 million for outreach and community programs, $5.5 million for penalties and $25 million to fund a subsidized program for black and Hispanic neighborhoods to have increased opportunities for mortgages.
According to money.cnn.com, Hudson City Saving Bank committed "redlining." CFPB Director Richard Cordray said "We allege that Hudson City's redlining practices illegally cut off opportunities for consumers in predominantly black and Hispanic neighborhoods to get a mortgage and achieve the dream of homeownership."
Hudson has been allegedly redlining from 2009 to 2013 and they restrict from opening branches in neighborhoods that are mostly black and Hispanic. The bank had opened new branches from 2004 to 2010 but 94% of the branches were located in areas that has little to no black or Hispanic community.
Hudson City Savings Bank, however, said that they disagreed "with the analysis of their loans" but agreed to pay the settlement price. The bank released their official statement and said "Hudson City historically relied heavily on purchases of loans from other originators to minority borrowers in the very census tracts that form the basis of the allegations, and kept such loans on its balance sheet in order to fulfill its Community Reinvestment Act and fair lending responsibilities."
Though a court's approval is still needed for the settlement, this is the largest case of redlining according to CFPB.
