The Justice Department announced that Citadel Federal Credit Union has agreed to pay more than $6.5 million to resolve allegations that it engaged in a pattern or practice of redlining majority-Black and Hispanic neighborhoods in and around Philadelphia, Pennsylvania from at least 2017 through 2021 in violation of the Fair Housing Act (FHA) and the Equal Credit Opportunity Act (ECOA).
The proposed consent order is the Justice Department’s first redlining settlement with a credit union.
According to a complaint filed in the U.S. District Court for the Eastern District of Pennsylvania, Citadel failed to provide mortgage lending services to majority-Black and Hispanic neighborhoods in the Philadelphia area and discouraged people seeking credit in those communities from obtaining home loans.
The complaint also alleged that Citadel’s branches are located almost entirely located in majority-White neighborhoods, with no branches in Philadelphia, which contains more than 75% of the majority-Black and Hispanic neighborhoods and 34% of the total population in Citadel’s market area.
Under the proposed consent order, which is subject to court approval, Citadel has agreed to invest $6.52 to increase credit opportunities for communities of color in the Philadelphia area.
Specifically, Citadel agreed to:
- 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.
- Hire a community lending officer who will oversee the continued development of lending in communities of color.
Citadel also agreed to retain independent consultants to enhance its fair lending program and better meet communities’ needs for mortgage credit. The credit union also will conduct a community credit needs assessment, evaluate its fair lending compliance management systems and conduct staff training.