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Federal, state prosecutors settle redlining case with Pittsburgh-based bank

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(The Center Square) – Litigated accusations of racial discrimination in mortgage loans have been settled for $13.5 million in an agreement between federal prosecutors, North Carolina’s attorney general and Pittsburgh-based First National Bank of Pennsylvania.

The home mortgage loans were in the Charlotte and Winston-Salem areas, a release from Attorney General Josh Stein says. Prosecutors said First National, which entered the market in 2017 with acquisition of Yadkin Bank, was diligent trying to provide mortgage loans to white residents and “discouraged Black and Hispanic North Carolinians from applying for loans.”

The practice is called redlining, according to the Federal Reserve Board. Creditworthy applicants for a housing loan to a certain neighborhood are denied even when otherwise eligible, and it violates the Fair Housing Act. The federal Department of Justice release said this marks the 13th settlement since the Biden administration created the Redlining Taskforce in 2021.

Among the settlement details, First National is to create an $11.75 million subsidy fund to “increase credit for home mortgage loans for communities of color in the Charlotte and Winston-Salem areas. The funds will be used to originate loans, assist in down payment and closing costs, and help pay people’s mortgage insurance premiums.”

First National is also to spend $750,000 on advertising to communities of color and provide consumer financial education; and spend $1 million on community partnerships “to provide credit and financial services” in the impacted areas.

“We cooperated fully to reach an agreement in this inherited matter as a good faith effort to avoid prolonged litigation,” said spokeswoman Jennifer Reel of First National.

The company did not agree with the findings and wished to move on, she said.

“When banks discriminate, it means hardworking people can’t buy a house, start a business, or invest in their futures,” Stein said. “I want every person who calls North Carolina home to have a fair shot, and I’m pleased that this settlement will create better borrowing opportunities for all North Carolinians.”

Yadkin Bank has 16 branches in and around Charlotte, and 15 in the Winston-Salem area about 80 miles north up Interstate 85.

The settlement included coordination with the Civil Rights Division in the U.S. Department of Justice, and the U.S. Attorney’s Office for the Middle District of North Carolina.

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