On Oct. 10, 2024, Citadel Credit Union, a $6 billion credit union in Pennsylvania, and the Department of Justice (DOJ) jointly submitted a Consent Order to settle claims of fair lending violations. The 25-page Consent Order spells out how Citadel engaged in redlining to violate Regulation B and the Fair Housing Act. 

Citadel is alleged to have redlined by avoiding providing home loans and other mortgage services in majority Black and Hispanic neighborhoods in its “market area.” It is also alleged Citadel discouraged mortgage applications from residents of, or seeking credit in, majority Black and Hispanic neighborhoods in Citadel’s market area. The DOJ alleges peer lenders generated mortgage applications in predominately Black and Hispanic neighborhoods at nearly three times the rate of Citadel and originated mortgage loans in these areas at more than three times the rate of Citadel. The DOJ also found Citadel’s branches are located almost exclusively in majority White neighborhoods, with no branches in Philadelphia, which contains more than 75% of the majority Black and Hispanic neighborhoods and 34% of the total population in Citadel’s market area. 

Among other requirements from the Consent Order, Citadel must do the following: 

• Engage an independent, qualified third-party consultant to conduct a detailed assessment of Citadel’s fair lending program as it relates to lending in majority Black and Hispanic census tracts. 
• Provide fair lending training to all staff. 
• Hire a full-time community lending officer. 
• Open three full-service branches in majority Black and Hispanic census tracts. 
• Invest a minimum of $6 million in a loan subsidy fund with the goal of increasing credit for home mortgage loans, home improvement loans and home refinance loans extended in majority Black and Hispanic census tracts. 
• Spend at least $250,000 to provide services related to credit, consumer financial education, homeownership, and/or foreclosure prevention to residents of majority Black and Hispanic census tracts. 
• Spend at least $270,000 on advertising, outreach, consumer financial education and credit counseling targeted toward majority Black and Hispanic census tracts. 

National Credit Union Administration (NCUA) Chairman Todd Harper issued a statement regarding the Consent Order, which states in part that the NCUA regularly refers credit unions to DOJ when NCUA identifies patterns or practices of discrimination and require appropriate relief for harmed consumers. For 2023 and 2024, Harper pointed out that these referrals impacted more than 75,000 consumers. 

If you’d like to make sure your fair lending procedures are meeting the mark, contact our Doeren Mayhew credit union regulatory compliance specialists today.