Trustmark to pay $5M for alleged redlining
The OCC has issued a Consent Order against Trustmark National Bank (Jackson, Mississippi), for engaging in violations of the Fair Housing Act, 42 U.S.C. §§ 3604(a), (b), and 3605(a), and its implementing regulation, 24 C.F.R. §§ 100.120 and 100.150. The OCC found, and the bank neither admits no denies that:
- (1) From 2014 through 2016 (“Relevant Period”), the Bank did not provide equal access to credit to residents seeking mortgage loans in majority-minority census tracts (“MMCTs”) and high-majority census tract (“HMCTs”) in the Memphis, TennesseeMississippi-Arkansas Metropolitan Statistical Area (“Memphis MSA”).
- During the Relevant Period, the Bank’s disparate treatment was evidenced through the Bank’s pattern of mortgage application and origination activity, branching history, Mortgage Loan Officer (“MLO”) structure and operations, and marketing and advertising.
- (3) During the Relevant Period, among other evidence of disparate treatment, the Bank’s mortgage lending activity in MMCTs and HMCTs in the Memphis MSA was
consistently statistically significantly lower than the lending activity of its peers; by the end of the Relevant Period only three of the Bank’s full-service branches and none of its limited-service branches were located in MMCTs, and two of these three branches were opened when the census tracts were non-MMCTs; further, during the Relevant Period, the Bank primarily relied on MLOs to generate mortgage applications but did not monitor distribution of marketing materials by its MLOs.
The order directs Trustmark to pay a civil money penalty of $4,000,000.
The OCC action was taken in cooperation with the U.S. Department of Justice and the Consumer Financial Protection Bureau. The DOJ and the CFPB have jointly filed a proposed Consent Order under which Trustmark would (1) reform its lending practices and compliance program; (2) conduct annual fair lending training for all employees with substantive involvement in mortgage lending, marketing, or fair lending or CRA compliance, or who have management responsibility over such employees; senior management with fair lending and marketing oversight; and members of the Board of Directors; (3) complete a Community Credit Needs Assessment for majority-Black and Hispanic census tracts within its Memphis lending area, to be conducted by an independent qualified third-party consultant; (4) augment its lending locations within minority census tracts in Memphis.
Trustmark will also invest a minimum of $3.85 million in a loan subsidy funds to increase credit for home mortgage loans, home improvement loans and home refinance loans for consumers applying for loans in Memphis majority-minority census tracts, and spend at least $200,000 annually on advertising, outreach, consumer financial education and credit counseling in the Memphis lending area.
Trustmark would also pay a civil money penalty of $5 million, $4 million of which will be be considered satisfied by the $4 million penalty assessed by the OCC.