Agreement resolves claims of race-based lending practices
WASHINGTON – (RealEstateRama) — The U.S. Department of Housing and Urban Development (HUD) announced today an agreement with First Federal Bank of Kansas City to resolve allegations of ‘redlining’ against African American mortgage applicants. HUD and two fair housing organizations claimed the lender’s designated service area effectively excluded African American neighborhoods, limiting residential mortgage lending to persons based upon their race. Read the HUD-mediated agreement announced today.
The Fair Housing Actmakes it unlawful for any person or other entity whose business includes residential real estate-related transactions to discriminate against any person because of race.
“Homeownership should never be affected by the color of a person’s skin. This agreement helps to ensure that all qualified families in the Kansas City area get a fair shot at owning their own home, regardless of race,” said HUD Assistant Secretary for Fair Housing and Equal Opportunity Gustavo Velasquez. “HUD will continue to work with banks across the nation to ensure they follow the Fair Housing Act.”
The agreement stems from two complaints filed on October 5, 2015, by the nonprofit organizations Metropolitan St. Louis Equal Housing and Opportunity Council (EHOC) and Legal Aid of Western Missouri. The groups alleged the bank’s lack of market penetration in African-American communities in the urban core (East Side) of Kansas City, Missouri made residential real estate products less available to people based on race. The groups also alleged that the bank designated its service area, or assessment area, in a way that excluded areas of high African American concentration, which resulted in making residential real estate products less available to persons based on race, a practice commonly known as redlining.
As part of the HUD-mediated conciliation agreement, First Federal Bank of Kansas City agreed to provide $75,000 in discounts or subsidies on home purchase loans on owner-occupied properties in majority African American census tracts in the Kansas City metropolitan area over a three year period. In addition, the bank agreed to originate $2.5 million in mortgage loans in majority African American neighborhoods over a three year period.
The bank also agreed to a series of important fair lending directed financial commitments:
- $105,000 to support a loan pool that finances the rehabilitation of vacant, blighted homes in distressed areas of Kansas City;
- $50,000 at the rate of at least $15,000 per year for three consecutive years for affirmative marketing and outreach to African American communities in the Kansas City metropolitan area;
- $30,000 to support financial education specifically targeting majority African American communities;
- $50,000 directly to the named complainants to support their fair lending and community reinvestment work.
First Federal Bank of Kansas City will appoint a Community Development Lender who is focused on low- and moderate-income communities and majority African American neighborhoods. Finally, conditional on regulatory approval of a planned merger, the bank also committed to maintaining three full-service established branches in majority minority census tracts.
People who believe they have experienced discrimination may file a complaint by contacting HUD’s Office of Fair Housing and Equal Opportunity at (800) 669-9777 (voice) or (800) 927-9275 (TTY). Housing discrimination complaints may also be filed at www.hud.gov/fairhousing or by downloading HUD’s free housing discrimination mobile application, which can be accessed through Apple and Android devices.
HUD’s mission is to create strong, sustainable, inclusive communities and quality affordable homes for all.
More information about HUD and its programs is available on the Internet
at www.hud.gov and http://espanol.hud.gov.