Florida Bank is the 10th Lender in 2 Years to Settle Redlining Charges

Florida-based Ameris Bank has recently settled with the U.S. Department of Justice (DOJ) for $9 million, following allegations of redlining in Jacksonville areas with a history of discriminatory lending. These allegations are part of a broader series of active redlining investigations by the DOJ that spans the nation.

Historically, Ameris Bank, which has 18 branches in Jacksonville, has not established a branch in areas predominantly populated by Black and Hispanic residents. Furthermore, it allegedly evaded offering home loans to individuals living in these neighborhoods.

In response to these accusations, Ameris Bank contested the claims in a federal court consent order, emphasizing their compliance with all relevant laws. Palmer Proctor, Ameris CEO, reiterated the bank’s dedication to providing equal mortgage opportunities in Jacksonville and their other marketplaces. He stated, “We condemn discrimination in any form and remain committed to helping people in underserved communities gain equal opportunity to achieve homeownership, as well as access to banking services.”

An analysis by the DOJ revealed that between 2016 and 2021, a mere 2.7% of 4,178 home loans from Ameris Bank were directed towards Black and Hispanic residents. This contrasts starkly with other lenders who reportedly did 9.5% of their business in similar neighborhoods.

Under the terms of the proposed settlement, Ameris Bank has committed to:

• Invest $7.5 million in a loan subsidy fund to aid majority-Black and Hispanic residents.
• Allocate $900,000 for advertising and outreach within these communities.
• Commit $600,000 towards fostering community partnerships to enhance mortgage access.
• Launch a new branch in an area predominantly inhabited by Black and Hispanic residents in Jacksonville.
• Hire a minimum of three mortgage loan officers dedicated to these communities.
• Appoint a full-time community lending director for these neighborhoods.
• Retain an external consultant to evaluate their compliance management system regarding redlining risks.

Historical data indicates that redlining has been an issue in Jacksonville since the 1930s. The Mapping Inequality project, a joint endeavor by four universities, has preserved several maps that displayed racially prejudiced risk assessments for lenders across over 200 cities.

This settlement with Ameris Bank is a landmark case for the DOJ in Florida. U.S. Attorney for the Middle District of Florida, Roger Handberg, expressed his optimism, stating, “This settlement means that Ameris Bank will provide financial remedies to Jacksonville’s underserved communities, and it demonstrates our commitment to guaranteeing equal access to housing and credit resources for all Americans.”

Since the DOJ initiated its Combating Redlining Initiative in October 2021, settlements surpassing $107 million have been achieved with ten different lenders. Some notable settlements include The Washington Trust Company, Park National Bank, City National Bank, Lakeland Bank, and Trident Mortgage Company.

Attorney General Merrick Garland confirmed the intensity of the ongoing efforts, revealing the DOJ’s involvement in over two dozen active redlining investigations nationwide.

A Brief History of Redlining in America

Redlining is a discriminatory practice that began in the 1930s and was institutionalized by federal and state governments. Its origins and impacts are deeply interwoven into the fabric of American housing, lending, and urban development. Here’s a concise history:

1. 1930s: Birth of Redlining – The term “redlining” originates from the maps created by the Home Owners’ Loan Corporation (HOLC) during the Great Depression. Neighborhoods deemed “high risk” for mortgage lenders, often based on racial composition, were outlined in red. This made it almost impossible for residents in these areas to get home loans or insurance.
2. Discriminatory Lending Policies – The Federal Housing Administration (FHA) and the Veterans Administration (VA) furthered the practice by refusing to insure mortgages in and near African-American neighborhoods, while simultaneously subsidizing builders who were mass-producing entire suburbs for whites – with the requirement that none of the homes be sold to African-Americans.
3. Post-War Era – After World War II, as GIs came home and the housing boom began, these discriminatory policies prevented most African-Americans from benefiting from government-guaranteed loans. This significantly curtailed black homeownership and the accumulation of wealth associated with it.
4. 1960s: Legal Changes – The Civil Rights Act of 1968, which includes the Fair Housing Act, made it illegal to refuse to sell or rent a dwelling based on race, color, religion, sex, or national origin. Despite its passage, discriminatory practices in housing and lending persisted, albeit in more subtle forms.
5. 1980s and 1990s: Reverse Redlining – In the late 20th century, the practice of “reverse redlining” began to emerge. Instead of denying services to minority communities, financial institutions targeted them for predatory loans, leading to higher rates of mortgage defaults and foreclosures.
6. 2008 Financial Crisis – The impacts of redlining and reverse redlining became prominently visible during the 2008 housing crisis. Predatory lending had disproportionately targeted minority homeowners, leading them to suffer more from foreclosures and financial hardships.
7. Ongoing Impacts – The effects of redlining continue to this day, as communities that were redlined in the past are more likely to experience lower levels of economic development, higher levels of poverty, and reduced property values. This has also contributed to systemic racial wealth gaps and disparities in homeownership.

While redlining is now illegal, its legacy persists. Efforts to address these historical injustices are ongoing, but the scars left on urban landscapes and communities by redlining remain a somber reminder of institutionalized discrimination in the U.S. housing system.