Justice Department Secures $9 Million Agreement with Washington Trust Company to Resolve Redlining C
Source: U.S. Department of Justice
Justice Department Secures $9 Million Agreement with Washington Trust Company to Resolve Redlining Claims in Rhode Island
Wednesday, September 27, 2023
For Immediate Release
Office of Public Affairs
The Justice Department announced today that Washington Trust Company (Washington Trust), the oldest community bank in the nation, has agreed to pay $9 million to resolve allegations that it engaged in a pattern or practice of lending discrimination by redlining majority-Black and Hispanic neighborhoods in Rhode Island.
Redlining is an illegal practice in which lenders avoid providing credit services to individuals living in communities of color because of the race, color or national origin of residents in those communities.
“This settlement should send a strong message to banks regarding the Justice Department’s firm commitment to combat modern-day redlining and ensure that all lenders are providing equal access to home loan opportunities to communities of color,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “This resolution will provide critical relief to impacted Black and Hispanic communities, enabling them to buy a home, keep their home or access the equity in their home. Ending redlining and providing relief to communities of color impacted by this unlawful practice is a necessary step in ongoing efforts to reduce racial wealth and homeownership gaps across our country.”
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The complaint alleges, from 2016 through at least 2021, Washington Trust failed to provide mortgage lending services to majority-Black and Hispanic neighborhoods in Rhode Island. The complaint alleges that despite expansion across the state of Rhode Island, Washington Trust has never opened a branch in a majority-Black and Hispanic neighborhood. The complaint alleges that Washington Trust relied on mortgage loan officers working out of only majority-white areas as the primary source for generating loan applications, and Washington Trust failed to train or incentivize its lending staff or conduct outreach, marketing and advertising of its mortgage services to compensate for its lack of branches and presence in majority-Black and Hispanic areas. The complaint further alleges that, compared to Washington Trust, over the same six-year period, other banks received nearly four times as many loan applications each year in majority-Black and Hispanic neighborhoods in Rhode Island. The complaint also alleges that, even when Washington Trust generated loan applications from majority-Black and Hispanic areas, the applicants themselves were disproportionately white.
Under the proposed consent order, which is subject to court approval, Washington Trust has agreed to do the following:
• Invest at least $7 million in a loan subsidy fund to increase access to home mortgage, home improvement, home refinance and home equity loans and lines of credit for residents of majority-Black and Hispanic neighborhoods in Rhode Island;
• Spend $1 million on community partnerships to provide services that increase residential mortgage credit access for residents of those neighborhoods;
• Spend $1 million for advertising, outreach, consumer financial education and credit counseling focused on majority-Black and Hispanic neighborhoods;
• Open two new branches in majority-Black and Hispanic neighborhoods in Rhode Island; and ensure at least two mortgage loan officers are dedicated to serving these neighborhoods; and
• Employ a Director of Community Lending who will oversee the continued development of lending in communities of color.
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Read more: https://www.justice.gov/opa/pr/justice-department-secures-9-million-agreement-washington-trust-company-resolve-redlining
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