City National Bank accused of racial bias in L.A. home loans
City National Bank has agreed to pay $31 million to settle a U.S. Justice Department lawsuit alleging racial bias in its Los Angeles County mortgages.
The government indictment, filed Thursday in Los Angeles, accuses the bank of violating federal housing and banking discrimination laws by avoiding lending to homebuyers in predominantly black or Latino neighborhoods.
The City National Bank is the largest bank headquartered in Los Angeles, but only one of the 11 branches it has opened in the county over the past 20 years is in a predominantly black or Latino neighborhood. The county’s population, which has nearly 10 million residents, is 49% Latino and 9% black.
From 2017 to 2020, City National Bank operated only three of its 37 branches in predominantly Black and Latino neighborhoods, according to the complaint.
The bank relied on “relationship managers” to generate home loan applications from existing customers, who the government said were predominantly white, and did not act on internal reports that showed it was at risk of violating fair credit laws.
Other banks serving LA County received more than six times as many loan applications from black and Latino regions, the government found.
City National Bank denied violating discrimination laws but said it would agree to settle the case to avoid lengthy litigation.
Under the proposed settlement, which was filed concurrently with the lawsuit and requires court approval, the bank would provide $29.5 million in home loan subsidies to borrowers in black and Latino areas, including interest rate cuts and down payment assistance.
Assistant lawyer. General Kristen Clarke and US Atty. Martin Estrada announced the deal at Second Baptist Church Los Angeles in Historic South Central, one of the oldest black churches in the city. No one from the bank took part in the event.
“Through this agreement, we are sending a strong message to the financial industry that we will not accept illegal barriers to residential mortgage lending,” said Clarke. “We will not tolerate illegal modern redlining.”
The City National Bank released a statement saying it supports the Justice Department’s efforts to ensure equal access to loans regardless of race.
“At City National, we are committed to ensuring that all consumers have an equal opportunity to apply for and receive credit,” he said.
Founded in Beverly Hills in 1953, City National Bank has strong ties to the entertainment industry. It was acquired by the Royal Bank of Canada in 2015.
As part of the settlement agreement, City National Bank agreed to spend $500,000 on ads targeting residents of black and Latino neighborhoods and $500,000 on a financial education program for consumers to improve their access to credit. .
The bank also said it plans to open a new branch in a predominantly black or Latino neighborhood and ensure that at least four loan officers are committed to serving those areas.
Atti. General Merrick Garland launched a program in 2021 to strengthen enforcement of housing discrimination laws. It raised $75 million to borrowers in Houston, Memphis, Philadelphia, Newark and Los Angeles.
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