Lakeland Bancorp in Oak Ridge, N.J., will invest $12 million in underserved markets around Newark, N.J., to settle redlining claims from the Department of Justice.
The $10.4 billion company, which recently agreed to be sold to Provident Financial Services in Iselin, N.J., agreed to the third-largest redlining settlement in DoJ history.
“Financial institutions that refuse to provide mortgage lending services to communities of color not only contribute to the persistent racial wealth gap that exists in this country, but also violate federal law,” Attorney General Merrick Garland said in a press release.
The agreement “represents the Justice Department’s continued commitment to addressing modern-day redlining, and to ensuring that all Americans have equal opportunity to obtain credit, no matter their race or national origin,” Garland added.
The DoJ claimed that, from 2015 to 2021, Lakeland failed to provide mortgage lending services to black and Hispanic neighborhoods in the Newark market. Most of the company’s branches were in majority-white neighborhoods, according to the complaint.
Lakeland agreed to invest at least $12 million in a loan subsidy fund for residents of black and Hispanic neighborhoods in the Newark area, along with $750,000 for advertising, outreach and consumer education and $400,000 to develop community partnerships.
Lakeland will open two branches in neighborhoods of color, including at least one in Newark, while ensuring that at least four mortgage loan officers are dedicated to serving all neighborhoods in and around city. The company will employ a full-time community development officer to oversee the continued development of lending in neighborhoods of color in the Newark area.
Lakeland, which agreed to settle the issue without contested litigation, cooperated with the DoJ “to remedy the redlining concerns that were identified,” the agency said.