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Mortgage

HUD: Associated Bank ‘redlining’ settlement largest ever

HUD Secretary Castro says settlement “sends a strong message”

The approximately $200 million in mortgage loans that Associated Bank (ASB) is required to provide to borrowers in minority neighborhoods as part of a settlement with the U.S. Department of Housing and Urban Development over charges of discriminatory lending makes it the largest settlement of its kind, HUD said Wednesday.

HUD issued a statement Wednesday, after HousingWire and other publications reported Associated Bank’s settlement, which the bank disclosed in a filing with the Securities and Exchange Commission.

According to HUD’s statement, the original complaint against Associated Bank was one of the largest “redlining” complaints brought by the federal government against a mortgage lender, and the $200 million settlement with Associated Bank is the largest of its kind that HUD has ever reached.

"This settlement sends a strong message that HUD does not tolerate practices that unfairly restrict an equal and open housing market," said HUD Secretary Julián Castro. "Discriminatory lending practices have too often cut off too many credit-worthy families from the opportunities they need to thrive. This agreement will ensure that more Americans can fulfill their hopes and aspirations."

The settlement resolves a HUD Secretary-initiated complaint alleging that the Wisconsin-based bank engaged in discriminatory lending practices from 2008-2010, involving the the denial of mortgage loans to African-American and Hispanic applicants and the provision of loan services in neighborhoods with significant African-American or Hispanic populations, HUD said.

In its statement, HUD said Associated Bank will pay nearly $10 million in the form of lower interest rate home mortgages and down payment/closing cost assistance to qualified borrowers in majority-minority census tracts in the housing market areas of Chicago; Milwaukee; Minneapolis-St. Paul; Racine, Wisconsin; Kenosha, Wisconsin; and Lake County, Illinois.

Additionally, HUD said that Associated also agreed to the following settlement terms:

  • Invest nearly $200 million through increased home mortgage lending activity in majority-minority census tracts in these areas
  • Provide nearly $3 million to help existing homeowners repair their properties in these predominantly minority communities
  • Pay $1.4 million to support affirmative marketing of loans in the above census tracts
  • Commit $1.35 million for community reinvestment and fair lending education and training
  • Open four loan production offices in majority-minority census tracts (three in the Chicago area and one in the Milwaukee area), subject to regulatory approval, in addition to three branches Associated has opened or is committed to opening in or near majority-minority census tracts in Chicago, Milwaukee, and Racine since HUD's complaint was filed
  • Offer fair housing training to all its employees and agents with substantial residential lending activity within six months and maintain a second level review process for all denied residential loans

As is customary with settlements such as these, Associated Bank denies the allegations of discrimination but said that it is agreeing to take a number of measures to improve its lending practices involving minorities.

"Associated is pleased to have concluded these discussions and will fully comply with the agreement. Doing so aligns with our ongoing commitment to our customers and communities where we do business," said Philip Flynn, president and CEO of Associated Bank, in a statement.

"We agree with HUD that we can improve our performance in some of the communities and neighborhoods we serve,” Flynn said. “We remain committed to the promotion of home ownership and lending in those areas.”

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