Trustmark National Bank, a Jackson, Mississippi-based company founded in 1889, will pay a $5 million penalty to the Consumer Financial Protection Bureau (CFPB) for discriminating against Black and Hispanic neighborhoods by deliberately not marketing, offering or originating home loans to consumers in majority-Black and Hispanic neighborhoods in the Memphis metropolitan area.
In addition to the fine, Trustmark will be required to invest $3.85 million via a loan subsidy program to increase nondiscriminatory access to credit, according to a CFPB press release.
The action was brought by the CFPB and the U.S. Department of Justice (DOJ), in cooperation with the Office of the Comptroller of the Currency (OCC).
The CFPB and DOJ aallege that Trustmark discouraged consumers residing in or seeking credit for properties located in these neighborhoods from applying for credit.
“Trustmark purposely excluded and discriminated against Black and Hispanic communities” says Rohit Chopra, director of the CFPB. “The federal government will be working to rid the market of racist business practices, including those by discriminatory algorithms.”
Trustmark has 196 branches in five southern states. It currently operates 22 branches in the Memphis metropolitan area.
This matter arose from the OCC’s examination that identified potential redlining, resulting in investigations by the CFPB and DOJ.
The joint complaint alleges that Trustmark violated the Fair Housing Act (FHA), the Equal Credit Opportunity Act (ECOA) and its implementing regulation, Regulation B, and the Consumer Financial Protection Act of 2010 (CFPA).
ECOA and Regulation B prohibit creditors from discriminating against applicants and prospective applicants in credit transactions on the basis of characteristics such as race, color, and national origin, including by redlining or engaging in conduct that would discourage on a prohibited basis a prospective applicant from applying for credit.
The complaint alleges that Trustmark avoided locating branches in majority-Black and Hispanic communities; avoided assigning loan officers to majority-Black and Hispanic communities; failed to monitor its fair lending compliance; and discouraged applicants and prospective applicants in majority-Black and Hispanic neighborhoods.
In addition to the monetary penalties, Trustmark will be required to increase its physical presence in, and outreach to, majority-Black and Hispanic neighborhoods. This includes opening a new lending office in a majority-Black and Hispanic neighborhood within the Memphis metropolitan area and funding $200,000 in targeted advertising per year to generate applications for mortgage loans in majority-Black and Hispanic neighborhoods.
The company will also be required to take remedial steps to improve its fair lending compliance and serve the credit needs of majority-Black and Hispanic neighborhoods in the Memphis metropolitan area.
Photo: Eskay Lim