More mortgage services will be available in primarily black neighborhoods in Marion County as a result of a settlement announced June 13 between the Department of Justice and First Merchants Bank.
In a complaint filed and settled on the same day, the Justice Department accused the bank of redlining, or denying primarily black neighborhoods in Marion County equal access to mortgage credit services between 2011 and 2017. The bank denies any liability or wrongdoing.
In the settlement, the bank promised to increase borrowing opportunities and investments in 50 majority-black census tracts in Marion County.
The Department of Justice said the Muncie-based lender had previously refused to market to majority-black census tracts in Marion County and had a disproportionately low number of loan applications and originations in these neighborhoods, compared to peer institutions. Black neighborhoods in Marion County were intentionally under served, the complaint alleges.
The bank emphasized its commitment to diversity.
“First and foremost, our company supports a diverse, inclusive and responsive culture,” said bank Marketing Director Karen Evens in a statement. “We very much appreciate the Department’s support to implement effective lending strategies and tactics moving forward. Their input is extremely valuable.”
The government began investigating First Merchants in June 2017.
During a period of expansion from 2011 to 2015, First Merchants opened branches in mostly white area surrounding Marion County, but left Marion County out, causing its service area to resemble a “horseshoe,” the complaint said. More than a quarter of Marion County’s population is black, but none of the other counties contained a black population of more than 8.3 percent, according to the complaint.
First Merchants Bank had no branch within Marion County until December 2015, according to the complaint.
As part of the settlement, First Merchants Bank has agreed to open a full-service banking center and a new loan production office in one of the county’s majority-black census tracts. The bank will also allot $1.12 million in loan subsidy funds for borrowers in these neighborhoods, and spend $500,000 on advertising, outreach, consumer financial education and credit repair.
The Fair Housing Center of Central Indiana, which raised allegations about the bank’s lending practices, was part of the settlement. It agreed to partner with First Merchants to help expand loan opportunities for Marion County’s majority-black neighborhoods.
The bank will give $150,000 to the Fair Housing Center for a lending and educational literacy program in hopes of increasing the number of qualified loan applications from Marion County’s African American community.
“We had raised some lending-based concerns,” the center’s Executive Director Amy Nelson said. “We were pleased that First Merchants Bank was willing to visit and talk about how to address those concerns and how to move forward through the agreement.”
Other First Merchant Bank initiatives outlined in the settlement include:
- The bank will designate a full-time Director of Community Lending and Development.
- The bank will hire a third-party consultant to assess their fair lending risk management program.
- The bank will hire a third-party consultant to conduct a credit needs assessment for majority-black census tracts in Marion County, which will outline the residential mortgage credit needs, demographic information of the area and potential strategies to provide required services.
- The bank will advertise and outreach within majority-black census tracks in Marion County.
Contact London Gibson at 317-444-6043or [email protected] Follow her on Twitter: @londongibson.
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