First-Citizens Bank & Trust fined by HUD for discriminatory lending

Predecessor accused of denying mortgage loans to minorities at higher rate

The Department of Housing and Urban Development announced recently that it reached a settlement agreement with North Carolina-based First-Citizens Bank & Trust Company that resolved allegations of discriminatory lending made against the bank’s predecessor, First Citizens Bank and Trust Co.

The allegations stem from a complaint filed against First Citizens Bank and Trust Co. in 2011 by HUD, which based its complaint on 2010 Home Mortgage Disclosure Act data.

According to HUD, First Citizens Bank and Trust Co. allegedly denied mortgage loans to African-American, Latino and Asian-American mortgage applicants at a “disproportionately higher rate” than white applicants in 2010 and 2011.

In January 2015, First Citizens Bank and Trust Co. was merged into First-Citizens Bank & Trust Company. As the successor, First-Citizens Bank & Trust Company continued to cooperate with HUD throughout this investigation, HUD said in an announcement.

As part of the settlement, First-Citizens agreed to take several steps to “ensure and protect equal access to credit including refraining from unlawful consideration of race or national origin when selecting sites for branch offices and services offered, conducting marketing, and defining Community Reinvestment Act assessment areas,” HUD said.

Additionally, First-Citizens is required to:

  • Make $140,000 available to nonprofit organizations that provide credit and housing counseling, financial literacy training, and related programs to first-time homebuyers in South Carolina
  • Adopt a new standardized and objective set of guidelines for a second review of retail channel residential loan applications initially denied by the automated underwriting system
  • Ensure that all of its employees and agents who have substantial involvement in manual underwriting of mortgages in their retail channel attend fair housing training
  • Hire three mortgage banker market specialists that will focus on diverse lending in the Charleston-North Charleston-Summerville, Columbia, and Greenville-Anderson-Mauldin metro areas
  • Spend $20,000 for affirmative marketing, advertising and outreach to residents in majority-minority census tracts in South Carolina
  • Partner with non-profit or community groups to conduct at least 24 financial education programs in South Carolina for individuals and small business owners

“This agreement aligns our shared goals of promoting fair housing and expanding access to credit for qualified working families,” Gustavo Velasquez, HUD’s assistant secretary for fair housing and equal opportunity, said. “HUD will use its enforcement powers to ensure that everyone has equal access to credit regardless of what they look like or where they come from.”  

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