BancorpSouth Bank
Outcome
CFPB and DOJ entered a $10.6 million consent order against BancorpSouth Bank for redlining majority-Black neighborhoods in Memphis, discriminatory mortgage denial rates for African Americans, discriminatory pricing, and an explicitly discriminatory loan denial policy.
Details
BancorpSouth Bank — Redlining and Discriminatory Mortgage Lending in Memphis (2011–2013)
Outcome: CFPB and DOJ secured a $10.6 million consent order requiring BancorpSouth Bank to pay $2.78 million to harmed African-American borrowers, establish a $4 million loan subsidy program for redlined neighborhoods, fund $800,000 in outreach and advertising, and pay a $3 million CFPB civil penalty.
BancorpSouth Bank, headquartered in Tupelo, Mississippi, was the subject of a joint enforcement action by the Consumer Financial Protection Bureau and the U.S. Department of Justice filed on June 29, 2016 in the U.S. District Court for the Northern District of Mississippi (Case No. 1:16-cv-00118). The complaint alleged multiple interlocking forms of illegal discrimination that operated together to deny mortgage credit to African Americans and residents of minority neighborhoods.
The most documented violation was redlining in the Memphis metropolitan area — the market from which BancorpSouth received the most mortgage applications. From at least 2011 to 2013, the bank structured its branch network, staffing, and marketing to avoid majority-minority neighborhoods. Branches were concentrated in majority-white areas, and the bank's Community Reinvestment Act assessment area was drawn to exclude high-minority areas of Memphis.
The CFPB investigation also uncovered that BancorpSouth denied mortgage applications from African-American applicants more frequently than from similarly situated non-Hispanic white applicants. The bank charged African-American customers higher rates and fees on certain mortgage loans compared to non-Hispanic white borrowers with equivalent qualifications. Most significantly, internal documents revealed an explicitly discriminatory loan denial policy where a bank employee's recorded statement showed a policy of not making loans to certain minority applicants.
The consent order required BancorpSouth to: pay $2.78 million into a settlement fund to remediate harmed borrowers for pricing and underwriting discrimination; establish a $4 million loan subsidy program to extend mortgage loans to qualified applicants in redlined Memphis neighborhoods; invest at least $800,000 in advertising, outreach, and community partnerships; pay a $3 million civil money penalty to the CFPB; and submit to fair lending training and compliance monitoring requirements.
Primary Source: CFPB Enforcement Action — United States v. BancorpSouth Bank
How Crucible Prevents This
HMDA data monitoring controls would have flagged the statistically significant underrepresentation of mortgage applications from majority-minority census tracts in Memphis. Automated branch footprint analysis cross-referenced against demographic maps would have identified the gap between service territory and minority neighborhood coverage. A fair lending audit protocol with required documented sign-off by compliance leadership would have surfaced the explicit discriminatory denial policy before it persisted for multiple years.
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