DOJ Reaches First-ever Redlining Settlement with a Credit Union

The U.S. Department of Justice announced Thursday that Citadel Federal Credit Union has agreed to pay over $6.5 million to resolve allegations that it engaged in redlining majority-Black and Hispanic neighborhoods in the Philadelphia area. The agency noted that this is the first redlining settlement ever reached with a credit union.

Under the proposed consent order, which is subject to court approval, Citadel FCU has agreed to invest $6.52 million to increase credit opportunities for communities of color in and around Philadelphia. Specifically, Citadel FCU will:

• Invest at least $6 million in a loan subsidy fund to increase access to home mortgage, home improvement and home refinance loans for residents of majority-Black and Hispanic neighborhoods in Philadelphia;
• Spend at least $250,000 on community partnerships to provide services related to credit, consumer financial education, homeownership and foreclosure prevention for residents of predominantly Black and Hispanic neighborhoods in Citadel's market area;
• Spend at least $270,000 for advertising, outreach, consumer financial education and credit counseling focused on predominantly Black and Hispanic neighborhoods in Philadelphia;
• Open three new branches in predominantly Black and Hispanic neighborhoods in Philadelphia; and
• Hire a community lending officer who will oversee the continued development of lending in communities of color.

NCUA Chairman Todd Harper released a statement calling the settlement "significant" and reinforced the agency's commitment to enforcing fair lending practices, "The NCUA maintains a strong relationship with the Justice Department's Civil Rights Division and the department's Combating Redlining Initiative, which investigates potential fair lending violations and helps to end discriminatory lending practices. That productive relationship will continue through our fair lending examination and referral process."

The Association is reviewing the consent order and will share steps credit unions can take to ensure compliance with fair lending laws in tomorrow's Advocacy Update.