A bank out of Missouri has agreed to a multi-million dollar settlement to resolve allegations of redlining against black applicants for residential loans.
First Federal Bank FSB says that it has helped generations of borrowers buy, build and improve their homes in the Kansas City area and nationally.
“In fact, we have more affordable mortgage solutions than virtually every other major home lender — including FHA loans and VA loans,” the company says.
But, according to
two nonprofit organizations, it didn’t include certain neighborhoods from its designated service area — effectively excluding black neighborhoods.
The practice allegedly violated the Fair Housing Act.
So the nonprofits filed two complaints in October 2015 with the Department of Housing and Urban Development.
“The groups alleged the bank’s lack of market penetration in African-American communities in the urban core (East Side) of Kansas City, Missouri, made residential real estate products less available to people based on race,” HUD said in a written statement Monday.
HUD indicated that the Kansas City, Missouri, financial institution
reached a conciliation agreement to resolve the allegations.
The settlement calls for First Federal Bank to provide $75,000 in discounts or subsidies on purchase financing secured by homes in neighborhoods with a majority of black residents.
It also requires the bank to originate $2.5 million in home loans in such neighborhoods.
In addition, First Federal Bank
has committed to providing $235,000 in fair lending initiatives.
