Redlining
United States v. Citadel Federal Credit Union
Date: July 1, 2024
Issue: Citadel Federal Credit Union’s consent order with the U.S. Department of Justice (DOJ) to resolve redlining allegations.
Case Summary: Citadel Federal Credit Union agreed to pay $6.5 million to resolve DOJ’s redlining allegations.
Citadel, a federal credit union headquartered in Exton, Pennsylvania, was the eighteenth-largest lender in its market area and the second-largest credit union in Greater Philadelphia. Citadel currently maintains twenty-four branches within its market area, but none in Philadelphia County.
In November 2021, DOJ notified Citadel it would investigate whether the credit union engaged in redlining, in violation of the Fair Housing Act (FHA) and Equal Credit Opportunity Act (ECOA). The FHA prohibits discrimination in the sale, rental, financing, and other housing-related activities based on several protected classes including race, sex, and national origin. Similarly, the ECOA prohibits discrimination in credit transactions.
The DOJ’s investigation revealed from at least 2017 through 2021, Citadel avoided serving the credit needs of majority-Black and Hispanic neighborhoods in its market area, particularly in Philadelphia County. DOJ also alleged Citadel discouraged those residing or seeking credit in the same areas from obtaining mortgage loans. By undertaking this conduct in majority-Black and Hispanic neighborhoods, while acting to serve the credit needs for mortgage loans in majority-White neighborhoods, DOJ claimed that Citadel engaged in unlawful redlining.
To resolve DOJ’s allegations, Citadel agreed to invest at least $6 million in a loan subsidy fund to increase access to home mortgage, home improvement, and home refinance loans for residents of majority-Black and Hispanic neighborhoods in Philadelphia. Citadel will also spend at least $250,000 on community partnerships related to credit, consumer finance education, homeownership and foreclosure prevention in the same area. Finally, Citadel will spend $270,000 for advertising, outreach and credit counseling in predominantly Black and Hispanic neighborhoods in Philadelphia.
Bottom Line: Citadel disputed all of the allegations made by DOJ.
Document: Consent Order
