Trustmark National Bank will pay federal regulators $ 5 million in fines to address allegations it has actively avoided offering and marketing home loans to black and Hispanic customers, federal officials said on Friday.

The Department of Justice, the Consumer Financial Protection Bureau (CFPB) and the Office of the Comptroller of the Currency (OCC) announced a joint consent order with Trustmark, accusing the bank of a model of redlining in the Memphis area, Tenn.,.

Redlining covers a wide range of techniques used by banks and lenders to avoid offering mortgages to non-white customers. While redlining historically involved explicit bans on offering loans to clients in predominantly black or Hispanic neighborhoods, it may also include an inability to market mortgages widely or make them readily available in those areas.

“Discrimination in lending goes against fundamental promises of our economic system. When people are denied credit simply because of their race or national origin, their ability to participate in the prosperity of our country is virtually wiped out, ”said the Attorney General. Merrick garlandMerrick Garland Biden: Comment that DOJ should prosecute those who defy “inappropriate” subpoenas House votes to hold Bannon in contempt of Congress Garland defends school board memo against “snitch line” attacks from GOP PLUS in a report.

“Today, we are committed to fighting modern day redlining by making much more robust use of our fair lending authorities,” he continued. “We will spare no resources to ensure that federal fair loan laws are strictly enforced and that financial institutions provide every American with an equal opportunity to obtain credit.”

Federal officials alleged that between 2014 and 2018, Trustmark avoided locating branches in predominantly black and Hispanic communities, failed to assign a single credit bureau to predominantly black and Hispanic communities, failed to monitor its compliance with fair loan laws and discouraged mortgage applications. black and Hispanic borrowers.

While 50 percent of Memphis area census tracts are predominantly black and Hispanic, only four of Trustmark’s 25 branches were located in predominantly black and Hispanic communities, according to the complaint. Trustmark would also not have assigned mortgage loan officers to its four branches in predominantly black and Hispanic communities, ensured broad access to home loans in those areas, or advertised mortgages in those areas. .

Trustmark’s counterpart banks in the Memphis area have reportedly received 2.5 times more mortgage applications from predominantly black and Hispanic communities, which federal officials have cited as evidence of the company’s disheartening actions.

“Trustmark has deliberately excluded and discriminated against black and Hispanic communities,” said CFPB director Rohit ChopraRohit Chopra’s consumer agency to investigate Big Tech’s payment systems in a report. “The federal government will work to rid the market of racist business practices, including those of discriminatory algorithms.”

Under the consent order, Trustmark will pay $ 5 million to settle allegations that it violated the Fair Housing Act and the Equal Credit Opportunity Act, which respectively prohibit racial discrimination in housing and credit transactions. The OCC also penalized Trustmark for allegedly violating the Community Reinvestment Act, which requires banks to meet the credit needs of underserved areas within its customer base.

Trustmark will also pay $ 3.85 million to subsidize home loans for residents of predominantly black and brown communities.

“We have fully cooperated with the agencies and made these settlements to avoid the distraction of protracted litigation and because we share the common goals of breaking down barriers to home financing and exploring innovative ways to help residents. from underserved areas to realizing the dream of homeownership, ”said Duane A. Dewey, President and CEO of Trustmark, in a statement.

“We look forward to continuing to make progress on the lending initiatives and operational improvements that we started implementing six years ago. “

The Consent Order with Trustmark is the second major redlining penalty issued under the Biden administration. Cadence Bank’s parent company agreed in August to pay around $ 8.5 million in fines and community investments to settle charges of lending discrimination brought by the Justice Department and a federal banking regulator.