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Pennsylvania Attorney General solicits redlining complaints from consumers

As part of an investigation launched earlier this year into allegations of redlining in the Philadelphia area, the Pennsylvania Attorney General Josh Shapiro recently called on mortgage borrowers and home loan applicants in the Philadelphia area to file complaints with his office “if they believe they may have been victims of redlining or experienced irregularities when looking for a mortgage or home loan.”

As examples of “redlining tactics or irregularities,” the AG’s press release lists:

  • Difficulty getting an in-person appointment with a loan officer
  • Not receiving a written pre-approval or quote promised by the loan officer
  • Not receiving return phone calls from a loan officer, and
  • Refusal to provide a loan application after the loan officer learns of the applicant’s race, the racial makeup of the neighborhood where the applicant intends to buy the home, or other information relating to the area’s racial or ethnic characteristics.

The PA AG launched the redlining investigation in response to an investigative article that identified a pattern of discrimination in which African American borrowers were 2.7 times more likely to be denied a home mortgage in Philadelphia than white borrowers.  The article found that white applicants received 10 times as many loans as black applicants, even though they made up similar proportions of the population.  Based on an analysis of publicly available HMDA data, the article concluded that black applicants were denied conventional mortgage loans at significantly higher rates than white applicants in 48 cities, including Philadelphia..

The District of Columbia’s AG as well as the AGs of other states, such as Washington, Illinois, Iowa, and Delaware, are reported to also be conducting redlining investigations.  In 2015, the New York AG entered into a settlement with Evans Bank to resolve a lawsuit filed by the NY AG alleging that the bank had engaged in redlining.  HMDA data was recently used by a Connecticut fair housing advocacy groups to support redlining claims in a lawsuit filed in Connecticut federal district court alleging that a bank had engaged in discriminatory mortgage lending in violation of the federal Fair Housing Act.

We expect state AGs to continue to focus on redlining unless and until the CFPB and/or DOJ re-focus on the issue.

Copyright © by Ballard Spahr LLP

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About this Author

Kaplinksy, partner, New York, finance
Partner

Alan S. Kaplinsky is Co-Practice Leader of the firm's Consumer Financial Services Group, which has more than 115 lawyers. Mr. Kaplinsky devotes his practice exclusively to counseling financial institutions on bank regulatory and transactional matters, particularly consumer financial services law, and defending financial institutions that have been sued by consumers in individual and class action lawsuits and by government enforcement agencies. Visit Mr. Kaplinsky's profile in Wikipedia.

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