The Justice Department filed a lawsuit against KleinBank on January 13th, alleging that KleinBank engaged in unlawful “redlining” of majority-minority neighborhoods in the Minneapolis-St. Paul metropolitan area.  The lawsuit, filed in the U.S. District Court for the District of Minnesota, alleges that from 2010 to at least 2015, the bank structured its residential mortgage lending business in such a way as to avoid serving the credit needs of neighborhoods where a majority of residents are racial and ethnic minorities.  Maps illustrating KleinBank’s branch positioning and lending practices during this time were entered as exhibits in the case.

Accoring to the complaint, KleinBank’s alleged redlining practices include: excluding majority-minority neighborhoods from the area it serves; locating branch offices and mortgage loan officers in majority-white neighborhoods, but not in majority-minority neighborhoods; and targeting marketing and advertising exclusively toward residents of majority-white neighborhoods.  From 2010 to 2015, KleinBank’s peer lenders generated applications in majority-minority neighborhoods at over five times the rate of KleinBank and made loans in majority-minority neighborhoods at over four times the rate of KleinBank.

“Redlining produces an unequal and unlevel playing field for borrowers in minority neighborhoods,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division.  “Cases like this one demonstrate the Justice Department’s strong commitment to hold banks accountable for continuing and perpetuating historic trends of inequality in residential mortgage lending.”