DOJ files lawsuit against Minnesota bank for alleged redlining practices

DOJ lawsuit KleinBankOn January 13, the Department of Justice (DOJ) issued a press release announcing that it had filed a lawsuit against KleinBank alleging that the bank had engaged in unlawful “redlining” of minority neighborhoods in the Minneapolis-St. Paul metropolitan area.

In its complaint, the DOJ alleged that KleinBank violated the Fair Housing Act (FHA) and the Equal Credit Opportunity Act (ECOA). The complaint alleges that KleinBank structured its residential mortgage lending practices in a way that allowed the bank to avoid providing credit services to consumers in neighborhoods where a majority of the residents are racial and ethnic minorities. The DOJ alleges that the practices occurred from 2010 to at least 2015. According to the complaint, the bank’s redlining practices include:

  • Excluding majority-minority neighborhoods from the area it serves;
  • Locating branch offices and mortgage loan officers in majority-white neighborhoods, but not in majority-minority neighborhoods; and
  • Targeting marketing and advertising exclusively toward residents of majority-white neighborhoods.

During the same time period, comparable lenders generated applications in majority-minority neighborhoods at over five times the rate of KleinBank and made loans in majority-minority neighborhoods at over four times more often than KleinBank.



Tags: DOJ, KleinBank, Redlining

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