Indianapolis Bank Charged With Redlining Against Black Residents In Federal Lawsuit Reaches Multi-Million Dollar Settlement
After allegations emerged that the Old National Bank (ONB) endangered black residents of Indianapolis, the 187-year-old bank agrees to an eight-figure settlement with the Fair Housing Center of Central Indiana (FHCCI) .
The financial institution will pledge $ 30 million in loans and programs to help black people interested in buying a home qualify for mortgages.
As part of the settlement, the bank also agreed to invest in predominantly black neighborhoods.
The agreement between ONB and FHCCI was announced on Thursday, December 16.
A detailed press release issued by FHCCI says that a significant part of the settlement is the opening of two branches in predominantly black communities of Indianapolis.
These branches will first open as loan production offices and after two years and regulatory approval, will become full-service branches. They will also be staffed by the bank with two mortgage loan officers and a community outreach specialist to meet the needs of the community.
Amy Nelson, executive director of FHCCI, said the agreement “will offset loan disparities for black housing seekers in Marion County by providing mortgage lending opportunities, bank branches, neighborhood stabilization grants and fair lending education. “
Over the next three years, as part of the plan and development of a special purpose credit program, ONB will provide a minimum of $ 20 million in loans for the purchase of single-family homes in low-income neighborhoods. predominantly black Indianapolis. This will be designed to help prepare black residents for loan qualification.
The deal says ONB will set aside “$ 1.1 million in loan grants, up to $ 10,000 per transaction, to support down payment assistance, mortgage insurance premiums, premiums and help with closing costs in majority black census tracts and expand the use of its Home Manager Mortgage Product, which allows loans up to 97% LTV [loan-to-value ratio] without PMI [private mortgage insurance] and revised program guidelines to increase eligibility.
At least $ 7.5 million in loans are expected to go to affordable multi-family housing developments in the city and $ 1.3 million in grants will go to local CDCs and community organizations serving or based in the city’s black neighborhoods.
The bank also pledged to hire a consulting firm to assess lending practices for black and brown applicants in other cities outside of Indianapolis, such as the Indiana cities of Evansville and Fort Wayne, as well. than in Louisville, Kentucky and Minneapolis, Minnesota.
In October 2022, the FHCCI deposit a Federal Court complaint against ONB, alleging that the institution used race to unlawfully discriminate in its residential mortgage lending practices. The complaint stated that despite 28% of Marion County residents identifying as black, ONB only granted 37 mortgages to black borrowers in the metro Indianapolis area in 2019 and 2020.
During those two years, there were 2,260 applications from potential black borrowers. A total of 2,250 mortgages were made in the Metro Indianapolis-Carmel-Anderson area during the same period.
According to the complaint, the main factors leading to the discrimination were the lack of branches in black neighborhoods, discrimination by loan officers and the lack of black employees dealing with mortgages.
âFHCCI and ONB have created a guide for other financial institutions to bridge their own disparities and ensure fair lending opportunities for all,â Nelson concludes.
As part of this agreement, FHCCI will receive a donation of $ 350,000 from ONB to support fair loan education opportunities and programs.
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