The DOJ and CFPB reached the largest residential mortgage redlining settlement in DOJ history with Hudson City Savings Bank in September 2015 — a $33 million combined settlement requiring $25 million in loan subsidies, $2.25 million in community investment, and a $5.5 million penalty — for a pattern or practice of illegally redlining majority-Black and Hispanic neighborhoods in New York, New Jersey, Connecticut, and Pennsylvania from 2009 through 2013.

Hudson City Savings Bank — $33 Million DOJ/CFPB Redlining Settlement: Largest in DOJ History (2015)

Outcome: The DOJ and CFPB reached a $33 million combined settlement with Hudson City Savings Bank, F.S.B. in September 2015 — the largest residential mortgage redlining settlement in DOJ history at the time — for a pattern or practice of illegally redlining majority-Black and Hispanic neighborhoods in four states from 2009 through 2013, requiring $25 million in direct loan subsidies, $2.25 million in community investment, and a $5.5 million civil penalty.

Hudson City Savings Bank, F.S.B., headquartered in Parsippany, New Jersey, was one of the largest savings banks in the United States, operating extensively across New York, New Jersey, Connecticut, and Pennsylvania. The DOJ and CFPB's joint complaint alleged that from at least 2009 through 2013, Hudson City engaged in a systematic pattern or practice of redlining by deliberately structuring its business to avoid serving, and thereby discourage residents in, majority-Black and Hispanic neighborhoods from accessing mortgage credit.

The discriminatory practices operated through the bank's entire mortgage delivery infrastructure: Hudson City placed its loan officers and branches primarily in majority-white communities, failing to establish the presence in minority communities necessary to generate loan applications. The bank's marketing, outreach, and community reinvestment activities were similarly concentrated in white neighborhoods. The cumulative effect was that Black and Hispanic prospective borrowers in four states faced substantially greater barriers to accessing Hudson City mortgage products compared to white borrowers in comparable white neighborhoods, in violation of both the Fair Housing Act and the Equal Credit Opportunity Act.

The November 2015 consent order required Hudson City to provide $25 million in a loan subsidy fund for mortgage access in previously redlined communities, invest $2.25 million in advertising, outreach, financial education, and community partnerships, open two full-service branches in majority-Black and Hispanic neighborhoods, and increase its dedicated mortgage loan officer presence in those communities. The $5.5 million civil penalty represented the largest CFPB fair lending penalty against a bank at the time.

Primary Source: DOJ Press Release — Settlement with Hudson City Savings Bank to Resolve Mortgage Lending Discrimination