Detroit (WWJ)- Following accusations of discrimination, Citizens Bank will invest millions of dollars into programs to help more African-Americans receive mortgages.
The U.S. Justice Department announced the $3.6 million settlement Thursday on a complaint that accused Citizens Bank and Citizens Republic Bancorp of violating the Fair Housing Act and the Equal Credit Opportunity Act, which prohibit financial institutions from discriminating on the basis of race and color in their mortgage lending practices.
The lawsuit alleges that Citizens Bank, and Republic Bank before it, served the credit needs of the residents of predominantly white neighborhoods in the Detroit metropolitan area to a significantly greater extent than they have served the credit needs of majority African-American neighborhoods.
“Some people may ask were there credit-worthy applicants in the city of Detroit, the answer is absolutely yes,” said Thomas E. Perez, Assistant Attorney General in charge of the Justice Department’s Civil Rights Division at a Thursday morning news conference. “Our complaint alleges that Citizens Bank effectively drew a red line around these majority African American communities in Detroit and the surrounding area.
Under the agreement, Citizens Bank will invest $1.625 million in a partnership with the city of Detroit to aid in neighborhood stabilization by providing existing homeowners with matching grants of up to $5,000 to fund exterior improvements, invest $1.5 million in a special financing program to increase the amount of credit the banks extend to majority African-American areas in Wayne County, and spend $500,000 for outreach to potential customers, promotion of their products and services, and consumer financial education.
Citizens Bank also will open a loan production office in a majority African-American area in Detroit and conduct fair lending training for its employees, according to a statement from the Justice Department.
The settlement still must be approved by a court.
At an afternoon news conference, Citizens president and CEO Cathy Nash said she doesn’t agree with the findings.
“We disagree with the findings and as a result of the settlement we do not have to agree to the allegations that were made,” Nash said. She said Citizens Bank settled to avoid what could have been a long and costly court battle.
Detroit Mayor Dave Bing said he was pleased the bank’s contributions will be in line with the city’s neighborhood stabilization initiatives.
“We welcome them to the growing number of partners who are working with us on behalf of our city and citizens,” Bing said.
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