ESSA Bank & Trust of Stroudsburg, Pennsylvania agreed to pay over $3 million in May 2023 to resolve DOJ allegations that from 2017 to 2021 the bank failed to provide mortgage lending services to majority-Black and Hispanic neighborhoods in and around Philadelphia — referred to DOJ by the FDIC — investing $2.92 million in a loan subsidy fund with no civil money penalty assessed.

ESSA Bank & Trust — DOJ $3 Million Redlining Settlement, Philadelphia Area (2023)

Outcome: ESSA Bank & Trust, headquartered in Stroudsburg, Pennsylvania agreed to pay over $3 million in May 2023 to resolve DOJ allegations — the department's seventh settlement under its Combating Redlining Initiative — that from 2017 through 2021 the bank failed to provide mortgage lending services to majority-Black and Hispanic neighborhoods in and around Philadelphia, with the case referred to DOJ by the FDIC in June 2022.

ESSA Bank & Trust, a community bank headquartered in Stroudsburg in the Pocono Mountains but with branches in the Philadelphia suburban area, was alleged by the DOJ to have failed to sufficiently serve the credit needs of majority-Black and Hispanic neighborhoods in and around Philadelphia from 2017 through 2021, discouraging minority borrowers from applying for mortgage loans and failing to ensure adequate access to its mortgage products in those communities.

The case originated with the FDIC, which identified fair lending concerns during its examination of ESSA Bank and referred the matter to the DOJ in June 2022 — an example of the regulatory coordination between the FDIC's examination function and the DOJ's enforcement function that became a centerpiece of the Combating Redlining Initiative. The DOJ opened its investigation in August 2022 and reached a settlement by May 2023.

The settlement — which the bank entered without admitting the allegations — required ESSA to invest $2.92 million in a loan subsidy fund to increase mortgage access in majority-Black and Hispanic neighborhoods, with at least 50% of the fund targeted at consumers applying for loans in majority-Black and Hispanic census tracts within five miles of the bank's Upper Darby and Lansdowne branches. ESSA was also required to spend $125,000 on community partnerships, $250,000 on outreach and consumer financial education, provide annual fair lending training to all employees, submit a Community Credit Needs Assessment for minority census tracts, and hire additional mortgage loan officers and a full-time Community Development Officer. No civil money penalty was assessed.

Primary Source: DOJ Consent Order — United States v. ESSA Bank & Trust