On July 29, 2019, the U.S. Department of Housing and Urban Development (HUD) announced that it has approved a conciliation agreement settling a Fair Housing complaint against CIT Bank, N.A., dba OneWest Bank (CIT). California Reinvestment Coalition (CRC) had accused CIT of violating the Fair Housing Act (FHA) in its positioning branch location, marketing, and mortgage loan origination practices. CRC claimed CIT’s actions discriminated against African-American and Latino borrowers in Southern California.
FHA prohibits housing discrimination based upon race, color, religion, national origin, sex, familial status, and disability. The FHA not only prohibits discrimination when renting or selling residential real estate. In addition, FHA prohibits a lender from refusing to provide mortgage loans or to offer different loan terms based upon protected characteristics.
CIT was accused discrimination by denying otherwise creditworthy borrowers mortgage loans based upon the neighborhood in which they live. This practice, called “redlining,” refers to a historical practice, established by the FHA in the 1930’s. Mortgage lenders drew red lines on a map around “undesirable” neighborhoods in which they didn’t want to make loans.
Typically, the redlined areas were areas with a large minority population. With mortgage loans not available on reasonably terms, many African-Americans were forced to accept predatory lending and purchase practices. Many minorities were unable to buy homes at all. Although it was outlawed when the FHA was passed in 1968, remnants of redlining continue today in areas the maps deemed “undesirable.”
The Conciliation Agreement will last for three years. During this period, CIT will create programs designed to increase home ownership opportunities for African-Americans and Latinos. CIT’s President of Consumer Banking, Steve Solk, expressed commitment to these programs: “We remain committed to serving the Southern California community with the tools, training and access to credit that is needed to pursue homeownership and enable more individuals to achieve their financial goals and thrive.”
CIT’s new programs include:
CRC Executive Director, Paulina Gonzalez-Brito, outcome: “We are pleased that OneWest has committed to serving Southern California’s communities of color in this way. We look forward to seeing the positive impacts of these lending commitments and programs on California neighborhoods and working class families striving to build wealth through buying a home.”