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HUD settles redlining claim against lender for $200 million.

The Department of Housing and Urban Development (HUD) announced it had reached an agreement with Associated Bank NA, Green Bay, Wisconsin, to settle a complaint brought by HUD that alleges the bank engaged in "discriminatory lending practices" from 2008 to 2010.

The HUD press release noted that the settlement stems from a HUD secretary-initiated complaint involving a disparate-treatment redlining case. The settlement amount, at $200 million, "is the largest settlement of this kind HUD has ever reached," according to HUD.

The agreement requires Associated to invest nearly $200 million through increased home lending in majority-minority census tract areas. Associated will be required to provide nearly $3 million to help existing homeowners in the designated areas repair their properties in predominantly minority communities. The bank also must pay $1.4 million to support affirmative marketing of loans in the designated census tracts.

The settlement requires Associated to open four loan production offices in majority-minority census tracts (three in the Chicago area and one in the Milwaukee area), subject to regulatory approval. These would be in addition to three branches it has already opened or committed to open in or near majority-minority census tracts in Chicago, Milwaukee and Racine, Wisconsin, since the HUD complaint was filed.

The settlement also requires the bank to commit $1.35 million for community reinvestment and fair lending education and training. Associated will also be required to offer fair housing training to all of its employees and agents handling heavy residential origination activity within six months of the settlement and provide second-level reviews for all denied home loans.

The terms of the agreement also require Associated over the next three years to pay nearly $10 million in the form of lower-interest-rate home mortgages and down payment/closing cost assistance to qualified borrowers in majority-minority census tracts in the housing market areas of Chicago; Milwaukee; Minneapolis-St. Paul; Racine; Kenosha, Wisconsin; and Lake County, Illinois.

The press release noted that this case commenced when HUD's assistant secretary for Fair Housing and Equal Opportunity filed a formal "disparate-treatment fair housing complaint" alleging that Associated Bank discriminated on the basis of race and national origin regarding the denial of loans to qualified African-American and Hispanic applicants. The complaint further alleged that the bank discriminated in the provision of loan services in majority-minority census tract areas.

The essence of the case stems from HUD's analysis of Associated Bank's mortgage lending activity from 2008 to 2010, which indicated that compared to other mortgage lenders Associated made "few loans in majority-minority census tracts in five metropolitan areas in Illinois, Wisconsin and Minnesota, but did make loans in nearby predominantly white tracts," HUD said.

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Title Annotation:NEWS ROOM
Comment:HUD settles redlining claim against lender for $200 million.(NEWS ROOM)
Publication:Mortgage Banking
Geographic Code:1U3WI
Date:Jul 1, 2015
Words:439
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