Memphis-area bank to pay nearly $2M to settle redlining accusations
“Patriot Bank has always acted to serve the home-mortgage credit needs in minority neighborhoods, and the bank’s strong record speaks for itself and flatly contradicts any allegation of wrongdoing,” said John Smith, Patriot Bank’s president and CEO. (Brad Vest/Special to The Daily Memphian)
Patriot Bank has agreed to pay $1.9 million to resolve claims it engaged in a pattern of lending discrimination by redlining Memphis neighborhoods with majority-Black and Hispanic populations.
The community bank, based in Millington, has eight branches across Shelby, Tipton and Fayette counties.
The U.S. Department of Justice complaint alleges that from 2015 to at least 2020, Patriot avoided providing mortgage services to majority-Black and Hispanic neighborhoods and discouraged people seeking credit in them from obtaining home loans.
The DOJ complaint said Patriot’s home-mortgage lending focused disproportionately on white areas around the city. And in the same six-year period, other banks received nearly 3 3½ times as many loan applications as Patriot in Memphis’ majority-Black and Hispanic neighborhoods.
Even when Patriot generated loan applications from majority-Black and Hispanic areas, the applicants themselves were disproportionately white, the complaint said.
“For too long, practices like redlining and discriminatory lending have been used to undermine the promises of our economic system,” said Kevin G. Ritz, U.S. attorney for the Western District of Tennessee. “Our office is committed to enforcing fair lending laws and ensuring that banks and lenders are providing communities of color equal access to credit and lending opportunities.”
The DOJ opened its investigation into Patriot’s lending practices after it received a referral from the bank’s regulator, the Board of Governors of the Federal Reserve System.
But Patriot said in a press release the bank “does not understand why the DOJ has pursued this matter.”
“For too long, practices like redlining and discriminatory lending have been used to undermine the promises of our economic system. Our office is committed to enforcing fair lending laws and ensuring that banks and lenders are providing communities of color equal access to credit and lending opportunities.”
Kevin Ritz
U.S. attorney for the Western District of Tennessee
The bank said in 2021, it launched a special loan program to provide down-payment and closing-cost grants to borrowers and offer home-improvement loans at a 1% interest rate.
Patriot said that under that program, it provided more than $1 million to cover down payments, closing costs and home-improvement assistance for borrowers in Black and Hispanic areas of the Memphis market.
The bank also said it more recently partnered with a community-development organization and the City of Memphis to finance a residential subdivision in a low-income, Black neighborhood in South Memphis.
“Patriot Bank has always acted to serve the home-mortgage credit needs in minority neighborhoods, and the bank’s strong record speaks for itself and flatly contradicts any allegation of wrongdoing,” said John Smith, Patriot Bank’s president and CEO.
“We are proud of our record and strongly deny that Patriot Bank ever avoided originating home-mortgage loans in Black and Hispanic areas of the Memphis market,” he said.
Patriot Bank cooperated with the investigation and worked with the DOJ to resolve the redlining allegations.
On Jan. 17, the DOJ announced that under the proposed consent order, which is subject to court approval, Patriot will invest $1.9 million to increase credit opportunities for communities of color in Memphis.
“This agreement with Patriot Bank signifies an important step toward preserving economic justice and for communities of color in Memphis as they buy homes, start businesses and take part in the American dream,” Ritz said.
In 2021, U.S. Attorney General Merrick Garland and Assistant Attorney General Kristen Clarke launched the Justice Department’s Combating Redlining Initiative to address discriminatory lending practices.
The department has since announced 11 redlining cases and secured more than $109 million in relief for communities of color across the nation that have been victims of lending discrimination.
Topics
redlining Patriot Bank U.S. Department of Justice United States Attorney Kevin Ritz Subscriber OnlyAre you enjoying your subscription?
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Aisling Mäki
Aisling Mäki covers health care, banking and finance, technology and professions. After launching her career in news two decades ago, she worked in public relations for almost a decade before returning to journalism in 2022.
As a health care reporter, she’s collaborated with The Carter Center, earned awards from the Associated Press and Society of Professional Journalists and won a 2024 Tennessee Press Association first-place prize for her series on discrepancies in Shelby County life expectancy by ZIP code.
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