The Department of Justice (DOJ) has approved a settlement from OceanFirst Bank in relation to a redlining investigation against them. The Conciliation Agreement was announced Wednesday, Sept. 18 by the Department of Housing and Urban Development (HUD). 

OceanFirst Bank—located in Toms River, New Jersey—was alleged to have engaged in redlining by restricting access to credit and mortgage lending services in majority-Black, Hispanic and Asian neighborhoods in the New Brunswick, New Jersey, area. 

Specifically, the complaint alleged that from 2018 through at least 2022, “OceanFirst acquired and subsequently closed branches and loan production offices in these neighborhoods, which, coupled with its insufficient marketing efforts and fair lending policies, led to OceanFirst failing to serve the needs of these neighborhoods.”

OceanFirst countered these allegations, stating in a release that since 2019 it has made “significant commitments to minority market lending and outreach initiatives in the New Brunswick area and continues to explore ways to build and deepen relationships for further growth in these communities.”

The DOJ investigation was launched based on complaints. However, the DOJ announced a new initiative back in October 2021 to combat redlining—commiting to investigating discriminatory practices by mortgage lenders across the country that exclude people of color in violation of federal law.

“Redlining is not only illegal, but it unfairly closes doors of economic opportunity for thousands of families of color in this country,” said HUD Acting Secretary Adrianne Todman.

Attorney General Merrick B. Garland echoed this sentiment, adding that “(t)his settlement, and the over $137 million in relief the Justice Department has secured for communities across the country, will help to ensure that future generations of Americans inherit a legacy of homeownership that they have been too often denied.”

This initiative has won a handful of other settlements through investigations into other lenders, including a settlement with Trident Mortgage in July 2022. The DOJ and the Consumer Financial Protection Bureau (CFPB) approved a $20 million settlement from that lender after it was alleged it engaged in discriminatory lending practices as well as that employees used slurs and racist language in their internal communications.

Christopher D. Maher, chairman and CEO of OceanFirst Financial Corp., stated that the commitments made in their settlement agreement are “consistent with our Bank’s 122-year history of providing credit and other financial services to all residents of the communities we serve.”

“We look forward to continuing the Bank’s efforts in the New Brunswick-Lakewood market to help meet the lending and banking needs of families, businesses, schools and organizations,” he continued, noting that some of these initiatives pre-date the settlement.

The terms of the Conciliation Agreement that OceanFirst must follow include:

• Invest at least $14 million in a loan subsidy fund with the goal of increasing access to credit for home mortgage loans, home improvement loans and home refinance loans in majority-Black, Hispanic and Asian neighborhoods in the New Brunswick area.
• Provide at least four outreach programs per year for real estate brokers and agents, developers and public or private entities engaged in residential real estate-related business in these neighborhoods to inform these stakeholders of OceanFirst’s products and services.
• Spend at least $400,000 on professional services for residents in these neighborhoods to increase access to residential mortgage credit and serve the credit needs of those communities through partnerships with one or more community-based or governmental organizations that provide services related to credit, financial education, homeownership and/or foreclosure prevention.
• Spend at least $140,000 each year of the agreement ($700,000 total) on advertising, outreach, consumer financial education and credit counseling in these neighborhoods.
• Assign or hire at least two full-time loan officers to solicit mortgage applications primarily in majority-Black, Hispanic and Asian neighborhoods in the New Brunswick area.
• Hire or designate a full-time position of director of community lending.
• Comply with HUD’s guidance on application of the Fair Housing Act to the advertising of housing, credit and other real estate-related transactions through digital platforms for all the bank’s advertising and targeting.

“The Justice Department will continue to hold banks and mortgage companies accountable for redlining and to secure relief for the communities that continue to be harmed by these discriminatory practices,” concluded Garland.

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