HUD REACHS $1.9 M SETTLEMENT WITH FIRST TENNESSEE BANK FOR BIAS AGAINST BLACKS & LATINOS

The U.S. Department of Housing and Urban Development (HUD) has announced a $1.9 million settlement with Memphis-based First Tennessee Bank, resolving allegations that the bank discriminated against African-American and Hispanic applicants by denying them mortgage loans and by allegedly failing to place bank branches in minority-concentrated areas. Read the agreement here.

The Fair Housing Act makes it unlawful to discriminate in the terms, conditions, or privileges of sale of a dwelling because of race or national origin.  The Act also makes it unlawful for any person or other entity whose business includes residential real estate-related transactions to discriminate against any person in making available such a transaction, or in the terms or conditions of such a transaction, because of race or national origin.

“Every family should have an equal shot at becoming a homeowner, regardless of what they look like or where they come from. Anything less is against the law,” said HUD Assistant Secretary for Fair Housing and Equal Opportunity Gustavo Velasquez. “HUD remains committed to ensuring that banks and other lenders comply with the Fair Housing Act.”

The Conciliation Agreement stems from a complaint the National Community Reinvestment Coalition filed with HUD alleging the bank denied loan applications from African-American and Hispanic borrowers at disproportionate rates and failed to place bank branches in minority-concentrated areas in Chattanooga, Knoxville, Memphis and Nashville.

Under the agreement, First Tennessee Bank will establish a $1.5 million subsidy fund to provide interest rate reductions on home mortgages, and down payment or closing cost assistance to qualified borrowers in identified portions of Chattanooga, Knoxville, Memphis and Nashville.

In addition, First Tennessee Bank agreed to partner with one or more community-based organizations to provide home repair or other grants to help existing homeowners repair their properties in predominantly minority communities, or partner with one or more community-based organizations to provide credit, financial, homeownership or foreclosure prevention services to residents in the affected areas.  Specifically, First Tennessee Bank will contribute $270,000 over three years to support these partnership efforts and an additional $105,000 to fund similar services to be provided directly by the National Community Reinvestment Coalition

Finally, the bank will pay $25,000 in damages to the National Community Reinvestment Coalition.