When you shop for a mortgage, you should not have to worry about discrimination. The Equal Credit Opportunity Act (ECOA) prohibits lenders from discriminating against applicants on the basis of race or ethnicity. Today, the Consumer Financial Protection Bureau (CFPB) and the Department of Justice (DOJ) have filed a complaint alleging that Hudson City Savings Bank violated the ECOA by engaging in unlawful redlining from 2009 to 2013. The complaint alleges that Hudson City redlined by locating its branches and selecting mortgage brokers nearly all outside of majority-Black-and-Hispanic neighborhoods, among other actions. In other words, it intentionally discouraged potential borrowers from equal access to credit in majority-Black-and-Hispanic neighborhoods in New Jersey, New York, Connecticut, and Pennsylvania. Maps showing Hudson City’s branch and broker locations, credit assessment areas, and applications can be found .
The CFPB is working to protect you from unlawful discrimination and to hold companies accountable for their actions. We not only help consumer finance markets work by making rules more effective, and consistently and fairly enforcing those rules, we educate and empower consumers to improve their financial lives.
The CFPB and the DOJ are filing a proposed order, which if entered will require Hudson City to:
- Improve its compliance management system to prevent discrimination in the future,
- Pay $25 million to subsidize mortgage loans made in the majority-Black-and-Hispanic neighborhoods that were redlined,
- Expand the community it serves under the Community Reinvestment Act to include previously excluded majority-Black-and-Hispanic neighborhoods,
- Create two new branches to serve majority-Black-and-Hispanic neighborhoods,
- Spend $750,000 partnering with community-based organizations that provide assistance in majority-Black-and-Hispanic neighborhoods,
- Spend $1 million on increased advertising and outreach in majority-Black-and-Hispanic neighborhoods,
- Spend $500,000 on providing financial education to residents of majority-Black-and-Hispanic neighborhoods, and
- Pay a $5.5 million penalty.
Today’s order represents the largest redlining settlement in history as measured by direct subsidies provided to affected communities.
Protections against discrimination
Under ECOA, it’s illegal for a creditor to discriminate in any aspect of a credit transaction based on certain characteristics, including race and ethnicity. If you believe a lender has discriminated against you, you can submit a complaint online or by calling (855) 411-2372.
You can learn more about the warning signs of discrimination and what you can do to protect yourself here.