PHILADELPHIA, PA — Citadel Federal Credit Union has agreed to resolve allegations of discriminatory lending practices, known as “redlining,” affecting predominantly Black and Hispanic neighborhoods in the Philadelphia area. The settlement, if sanctioned by the court, will mark the Justice Department’s inaugural redlining resolution involving a credit union, signaling a significant step in combating lending discrimination.
The practice of redlining involves denying credit services based on the racial or ethnic composition of neighborhoods. In its complaint, the United States accused Citadel of neglecting mortgage lending services in majority-Black and Hispanic areas at rates significantly lower than those of comparable financial institutions from 2017 to 2021. Meanwhile, peer lenders reportedly issued mortgage applications and loans at over three times the rate of Citadel in these communities.
The proposed consent order mandates Citadel to invest over $6.5 million to enhance credit access in Philadelphia’s neighborhoods of color. This includes a $6 million commitment to a loan subsidy fund aimed at facilitating homeownership, home improvements, and refinancing opportunities for affected residents. Additionally, Citadel will allocate $250,000 towards community partnerships offering credit and financial services, and $270,000 for targeted advertising and financial education.
A critical component of the settlement is the establishment of three new branches in predominantly Black and Hispanic neighborhoods in Philadelphia over the next five years. This expansion aims to bridge the current gap, where Citadel’s presence is largely confined to predominantly White suburbs.
U.S. Attorney Jacqueline C. Romero expressed optimism about the settlement’s potential to rectify longstanding inequities. She highlighted the historical impact of redlining on financial disparities and emphasized the transformative possibilities of equitable credit access.
Assistant Attorney General Kristen Clarke reinforced the Justice Department’s dedication to holding all lenders accountable for discriminatory practices. “This settlement will expand investment in Black and Hispanic communities, particularly in Philadelphia, and increase opportunities for homeownership and financial stability,” she stated, highlighting the broader implications for millions of credit union members nationwide.
The settlement is part of the Attorney General’s Combating Redlining Initiative, aimed at eradicating this entrenched form of discrimination. Since its inception, the initiative has announced multiple redlining resolutions, securing substantial relief for communities adversely affected by lending biases.
Throughout the investigation, Citadel cooperated with the Justice Department, demonstrating a commitment to addressing the allegations. This cooperative approach underscores a mutual goal of fostering equitable access to financial services for all Philadelphia residents.
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