Kansas City Lender to Pay 2.8 Million in Redlining Case with HUD

Kansas City Lender to Pay 2.8 Million in Redlining Case with HUD

First Federal Bank of Kansas City has agreed to a $2.8 million settlement with the Department of Housing and Urban Development to resolve allegations of redlining in African-American neighborhoods.  As part of the conciliation agreement, First Federal agreed to originate $2.5 million in loans in majority African-American census tracts over a three-year period.  The settlement  also calls for $275,000 in discounts or subsidies on home purchase loans that can be used to assist with closing costs, down payments, and interest rate reductions. The maximum subsidy per borrower is $2,500.

First Federal Bank also agreed to provide:

  • $105,000 to support a loan pool that finances the rehabilitation of vacant, blighted homes in distressed areas of Kansas City.
  • $50,000 for marketing and outreach to African-American communities.
  • $30,000 to support financial education in majority African-American communities; and
  • $50,000 to the nonprofit complainants to support their fair lending and community reinvestment work.

A statement from HUD said the groups argued that First Federal failed to penetrate markets in Kansas City’s urban core and excluded areas with a concentration of African-American residents from its service area.  The bank denied having discriminated against the groups who complained but agreed to settle the claims.

March 1st, 2016|