Last week, the DOJ (Department of Justice) announced that Citadel Federal Credit Union agreed to pay more than $6.5 million to resolve redlining allegations, marking the DOJ’s first such settlement with a credit union.
The settlement addresses the credit union’s failure to provide adequate mortgage lending services to majority-Black and Hispanic neighborhoods in and around Philadelphia from 2017 to 2021, violating the Fair Housing Act (FHA) and the Equal Credit Opportunity Act (ECOA).
Key Allegations:
According to the DOJ’s complaint, Citadel predominantly located its branches in majority-White neighborhoods, leaving significant gaps in service for communities of color. With over 75% of majority-Black and Hispanic neighborhoods in Philadelphia, the credit union’s lack of presence discouraged residents from seeking home loans.
Settlement Terms:
The proposed consent order, subject to court approval, includes several commitments from Citadel:
- Investment in Lending: At least $6 million will be allocated to a loan subsidy fund to enhance access to mortgage, home improvement, and refinance loans.
- Community Partnerships: Citadel will invest $250,000 in services related to credit education and foreclosure prevention in predominantly Black and Hispanic neighborhoods.
- Outreach and Education: $270,000 will be directed toward advertising and consumer financial education initiatives.
- Branch Expansion: The credit union will open three new branches in communities of color.
- Dedicated Staffing: A community lending officer will be hired to oversee lending initiatives.
- Enhanced Fair Lending Practices: Citadel will engage independent consultants to improve its fair lending program and conduct staff training.
You can find the DOJ’s announcement here.