IN THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF INDIANA
UNITED STATES OF AMERICA,
Plaintiff, CIVIL ACTION NO. 2:06-CV-344
v.
CENTIER BANK,
Defendant.
CONSENT ORDER
INTRODUCTION
This Order is submitted jointly by the parties for the
approval of and entry by the Court simultaneously with the filing
of the United States’ complaint in this action. The Order
resolves the claims of the United States that the defendant,
Centier Bank (“Centier” or “the Bank”), has engaged in a pattern
or practice of conduct in violation of the Fair Housing Act
(FHA), 42 U.S.C. §§3601-3619, and the Equal Credit Opportunity
Act (ECOA), 15 U.S.C. §§1691-1691f, by discriminating on the
basis of race, color, and national origin in the extension of
residential real estate-related and small business credit in the
Gary, Indiana, metropolitan area.
The United States contends that the Bank has avoided doing
business in and serving the lending needs of majority minority
census tracts in the Gary metropolitan area.1
The complaint
alleges that the Bank’s policies and practices have denied the
residents of majority minority census tracts an equal opportunity
to obtain residential real estate-related and small business
financing because of the racial and ethnic composition of those
tracts.
The Bank denies that it engaged in race or national origin
discrimination in its branching, marketing, solicitation or
extension of credit, or that any act or omission on its part as
alleged in the Complaint filed by the United States, or in this
Agreement, in any way violated either the Fair Housing Act or the
Equal Credit Opportunity Act. Nevertheless, because the Bank is
committed to providing for the credit needs of all businesses and
individuals in Northwest Indiana, including the Cities of Gary,
East Chicago, and Hammond, the Bank voluntarily consents to the
entry of this Agreement. Moreover, through the specific
activities articulated in this Agreement, the Bank affirms its
strong commitment to be an industry leader in lending throughout
Northwest Indiana.
There has been no factual finding or adjudication with
respect to any matter alleged by the United States. Accordingly,
the execution of this Order is not, and is not to be considered
as, an admission or finding of any violation of the FHA or the
ECOA by the Bank. Rather, the parties have entered into this
agreed Order to resolve voluntarily the claims asserted by the
United States in order to avoid the risks and burdens of
litigation. The parties agree that full implementation of the
terms of this Order will provide a fair and reasonable resolution
of the allegations of the United States in a manner consistent
with the Bank’s legitimate business interests.
Under the provisions of this Order, the Bank has committed
itself to a program designed to improve its performance in
meeting the credit needs of residents of and small businesses
located in majority minority census tracts. The Bank will ensure
that its lending products and services are made available and
marketed in majority minority census tracts on no less favorable
a basis than in white residential areas. The Bank commits itself
to take all reasonable, practicable actions, consistent with
safety and soundness, to increase the level of its residential
and small business lending in majority minority census tracts,
with the ultimate objective of extending credit there at a level
comparable to its lending in majority white census tracts. The
remedial plan to achieve this objective, detailed in subsequent
sections of this Order, includes the opening of new branches in
majority minority census tracts (hereinafter referred to as
“designated” areas or tracts), investment in those areas through
subsidized loan offerings, targeted marketing programs, and
expanded outreach and education efforts in those areas in order
to remedy the effects of the Bank’s alleged discriminatory
practices.
SUMMARY OF UNITED STATES’ ALLEGATIONS
Centier Bank is an Indiana state-chartered bank head-quartered in Whiting, Indiana. It has approximately $1.5 billion
in assets and deposits of over $1.1 billion, the second-largest
deposit market share in the Gary metropolitan area. The Bank is
primarily a residential real estate and small business lender,
and has been one of the Gary area’s largest volume lenders in
each category for at least the past five years.
During the past 20 years, the Bank has expanded its
business, including extending credit for residential real-estate
related and small business transactions, to substantial portions
of the Gary metropolitan area and beyond.2
From eleven branches
in 1985, Centier has grown to its current network of forty branch
offices located throughout the Northwest Indiana region. The
expansion of the Bank’s business has taken place in a
metropolitan area with residential patterns extremely segregated
both by race and national origin. The United States alleges that
in operating and extending the scope of its business, Centier has
acted to meet the residential and small business credit needs of
predominantly white residential areas while avoiding serving the
lending and credit needs of majority minority neighborhoods, most
of which are located in the cities of Gary, East Chicago, and
Hammond.
The United States alleges that Centier has engaged in a
pattern of locating or acquiring branch offices outside of
communities with a majority of African-American and/or Hispanic
residents. By January 2001, Centier had 27 branch offices
throughout the Gary metropolitan area, but none in a majority
minority census tract. Not until late 2002 did the Bank open a
branch in Gary. It subsequently opened two in-store supermarket
branches in East Chicago and Hammond, but during the same period
added seven more full-service branches in white suburban
communities. The United States also alleges that none of the
branches in Gary, East Chicago, or Hammond has offered the full
range of lending services available at Centier’s full-service
branches located in white suburban communities and that
information about those services has not been readily available
to prospective customers at those three branches.
The United States further alleges that Centier’s unlawful
consideration of race and national origin in its business
practices is demonstrated by its advertising and marketing
practices. For years, the Bank has directed its print and radio
advertising solely to “general audience” media, although minority
format radio stations and newspapers with primarily minority
readership exist in the Gary metropolitan area market.
Additionally, until 1999, Centier excluded nearly all the
majority minority census tracts in the Gary metropolitan area
from its assessment area, also known as its community service
area, under the Community Reinvestment Act of 1977, 12 U.S.C.
§§2901-2906 (CRA). This meant the exclusion of nearly all of the
cities of Gary, East Chicago, and Hammond from that area. The
Bank changed its assessment area boundaries to include all of
those three cities only after the 1999 compliance examination
conducted by its federal regulator, the Federal Deposit Insurance
Corporation.
The United States also contends that statistical analyses of
Centier’s residential and small business lending over the past
five years (2000-2004) demonstrate that it has consistently
served the credit needs of residents and owners of small
businesses in majority white neighborhoods of the Gary area to a
significantly greater extent than it has served the credit needs
of the residents and owners of small businesses located in
majority minority neighborhoods. During this five-year time
period, only 4.8% of the residential loan applications Centier
generated were secured by property located in majority minority
census tracts – in a metropolitan area in which, according to the
2000 Census, 38% of the census tracts are majority minority
tracts. By contrast, 18.4% of such applications generated by the
aggregate of all lenders in the Gary metropolitan area during
this time period were secured by property located in majority
minority census tracts. Although Centier is one of the largest
volume residential lenders in the Gary SMSA, fewer than 1% of its
residential loan applications from 2000-2004 were secured by
property located in majority minority census tracts. Of the
$741.6 million in residential loans Centier originated over those
five years, only 1.65%, $12.2 million, has involved property
located in majority minority census tracts.
In summary, the United States contends that the Bank’s
credit-related policies and practices, taken as a whole, have
been implemented with the purpose and effect of discriminating on
the basis of race, color, and national origin in the extension of
residential real estate-related and small business credit (a
practice commonly referred to as redlining), thereby denying
residents and owners of small businesses in majority minority
census tracts in the Gary metropolitan area equal access to
credit, in violation of both the FHA and the ECOA.
THE BANK’S RESPONSE TO UNITED STATES’ ALLEGATIONS
Centier Bank denies the United States’ allegations and
maintains that at all times it conducted its lending in
compliance with the letter and spirit of the fair lending laws
and in a non-discriminatory manner. Centier acknowledges that it
is a relatively new entrant into the cities of Gary, East Chicago
and Hammond. From the time Centier’s first branch opened in
Highland, Indiana, in 1963 and for more than twenty years
thereafter, Centier was prohibited by Indiana law from branching
into cities in which resided the home office of another banking
institution. This restriction included the cities of Gary, East
Chicago and Hammond. Centier was able to grow through the
acquisition of other banks in the 1980s, after which it
aggressively sought to make loans, primarily to small businesses
serving the Northwest Indiana steel industry.
Due to the steel belt recession in the 1980s, Northwest
Indiana’s economy declined precipitously. The steel and real
estate industries were particularly impacted by this decline,
resulting in losses to Centier due to its strategy of making
loans to steel-related businesses and a lack of capability on the
part of local businesses and residents to support loans. This
economic downturn has persisted over the past twenty (20) years.
The Federal Reserve Board has chronicled an increase in
unemployment in Lake County in recent years: a precipitous drop
in manufacturing jobs from 1991-1999 after the loss of over
60,000 steel-related manufacturing jobs in the 1980s, and the
bankruptcies of two major steel-producing companies in 2001,
resulting in additional layoffs.3
Centier maintains that the long-standing presence of certain
other banks in Gary, East Chicago and Hammond coupled with the
severe economic downturn occurring just as Indiana’s branching
restrictions eased in the 1980s and continuing until today, has
made it difficult for Centier to gain a significant market share
of loans in the Gary, East Chicago and Hammond loan markets.
Because other banks had the opportunity to develop a major share
of the loan market prior to the time Centier was permitted entry
into those markets, and the economy of the area has restricted
the number of households that can afford to service a mortgage,
Centier’s loan opportunities in those three cities have been
limited. Nonetheless, Centier has sought to branch into the
Gary, East Chicago and Hammond markets, expending considerable
effort to open additional branches, particularly in Gary, since
1999 and eventually opening branches in Gary and East Chicago in
late 2002 and a branch in Hammond in late 2003. It continues to
strive to originate loans in these communities.
In summary, while Centier acknowledges that its percentage
of loans originated in majority minority census tracts is less
than the aggregate percentage of such loans on the part of all
banks in the area, it has never intended such an outcome and has
never deliberately discriminated against any individuals, groups,
or areas based on race or national origin. Rather, it was
prevented by circumstances from making inroads into the market in
these areas and has recently sought to develop a banking presence
in those areas.
PROACTIVE INITIATIVES BY CENTIER
PRECEDING ENTRY OF CONSENT DECREE
The United States recognizes that Centier Bank has already
undertaken initiatives to help meet the credit needs of the
residents in majority minority neighborhoods in Gary, East
Chicago, and Hammond. In 2002 and 2003, prior to the United
States’ investigation, Centier opened branches in each of those
three (3) cities. In addition, Centier has taken other steps
since receiving notice of the United States’ investigation and
subsequently proposed lawsuit. Those actions include, but are
not limited to, the following:
In July 2006, Centier hired a Vice President and
Director of Community Lending who is an African-American with significant experience in loan
origination in the Gary, East Chicago and Hammond
markets. He is assisted by two additional loan
originators, one who is African-American and one who is
Hispanic and fluent in Spanish. These latter two
individuals are now located in the Gary branch. The
Hispanic loan originator will later be located in an
expanded East Chicago branch of Centier.
Centier’s Community Relations Coordinator and its
Hispanic loan originator have provided financial
literacy and home ownership instruction.
In partnership with Freddie Mac, Centier has provided
funding to the Consumer Credit Counseling Service of
Indiana to provide assistance to residents of lower-
income neighborhoods in Lake County, Indiana, in
obtaining affordable housing.
Centier has collaborated with Neighborhoods, Inc. to
originate home improvement loans in Hammond as well as
other low to moderate income areas, with reduced
interest rates and a loan origination fee paid to
Neighborhoods, Inc.
Centier has collaborated with the City of Gary
Department of Community Development, offering a special
reduced interest rate on home improvement loans in
Gary, and has marketed its services to first time home
buyers through the Department as well as conducting
first time home buyer seminars.
The United States agrees that these initial efforts
represent positive steps to address issues which are the subject
of the United States’ complaint. These actions are hereby
incorporated by reference into the marketing and outreach plan
described below.
REMEDIAL ORDER
General Nondiscrimination Injunction
1. Centier Bank, including all of its officers, employees,
agents, representatives, assignees, and successors in interest,
and all those in active concert or participation with any of
them, is hereby enjoined from engaging in any act or practice
which discriminates on the basis of race, color, or national
origin in any aspect of a residential real estate-related
transaction in violation of the Fair Housing Act, 42 U.S.C.
§§3604 and 3605, or in any aspect of a credit transaction in
violation of the Equal Credit Opportunity Act, 15 U.S.C.
§1691(a)(1). This prohibition includes, but is not limited to:
the selection of sites for and the provision of services at
branch offices; marketing; the definition of an assessment area
under the Community Reinvestment Act; and the determination of
geographic areas in which loan applications are solicited or
funded, except to remedy the violations alleged by the United
States.
2. Centier shall take the actions necessary to ensure that
the Bank offers and provides all persons with an equal
opportunity to apply for and obtain credit, regardless of the
predominate race, color, or national origin of the area in which
a person lives, or the area in which the property securing the
loan or the small business is located. Those actions include,
but are not limited to, the remedial actions specified in this
Order.
General Principles
3. The Bank shall take all reasonable, practicable steps
consistent with safety and soundness, including, but not limited
to, those specified below, to ensure that all types of credit it
offers - including residential and CRA small business loan
products - are made available and marketed in majority minority
census tracts on no less favorable a basis than in majority white
census tracts so that all persons throughout the Gary
metropolitan area will have an equal opportunity to access and
obtain credit from the Bank.
4. This Order requires the Bank to take these actions to
remedy Centier’s alleged discrimination. The Bank retains the
discretion to take any additional actions it believes are
appropriate to achieve the goals of this Order and shall provide
written notice to the United States thirty (30) days prior to
implementation of any such additional actions during the term of
this Order.
Lending Initiatives
Community Reinvestment Act Assessment Area
5. In late 1999, the Bank revised its CRA assessment area
to include all of the Gary MSA, then defined to include the whole
of Lake and Porter counties.4
The Bank agrees to continue to
include the entirety of those two counties in its CRA assessment
area. Nothing in this Order precludes the Bank from expanding
its CRA assessment area in the future in a manner consistent with
the provisions of the CRA and its implementing regulations.
Additional Branch Locations and Services
6. Centier’s residential lending and, to a lesser extent,
its CRA small business lending, have been generated primarily by
the activities of loan officers based in branch offices. The
Bank shall evaluate future opportunities for expansion, whether
by acquisition or opening new offices, in a manner consistent
with achieving the remedial goals of this Order.
7. Within nine (9) months of the entry of the Consent
Order, Centier will expand its current East Chicago, Indiana, in-store supermarket office to include two (2) private offices and a
conference room. This branch is located in a majority-Hispanic
census tract. From the time the expansion is completed, through
the term of the Consent Order, Centier will place at least one
full-time residential lender at this office, fully trained in all
aspects of home mortgage and home equity lending. This lender’s
training will also encompass the fair lending obligations of
banks under the Fair Housing Act, the Equal Credit Opportunity
Act, and the Community Reinvestment Act. Centier will offer its
full range of banking and residential lending services at this
branch. Further, this branch will provide access to small
business lending services and expertise comparable to that
provided at its branches in majority white census tracts. The
Bank will also provide at least one employee at this branch who
is fluent in Spanish and is fully trained to handle lending
transactions.
8. The Bank shall open or acquire at least two (2)
additional full-service branch offices located in the designated
areas. These new branches will provide the complete range of
services typically offered at the Bank’s full-service branches in
the suburban areas of Lake and Porter Counties. These lending
services encompass, but are not limited to: (a) the full range of
residential lending services, including a full-time on-site
residential lending officer; and (b) both information about
business lending options and access to a business lending
specialist comparable to that provided at the Bank’s branches
located in majority white census tracts. The Bank shall promptly
evaluate possible locations in the designated tracts for these
two new branches and shall present its proposals for the new
branches to the United States for its review and approval, which
shall not be unreasonably withheld, within six (6) months of the
date of entry of this Order for the first and within eighteen
(18) months for the second.
9. Centier will make all reasonable efforts, subject to
local government and regulatory approval, to open or acquire a
new branch in a majority African-American census tract within
eighteen (18) months of the entry of the Consent Order. Centier
will place at least one full-time residential lender at this
office, fully trained in all aspects of home mortgage and home
equity lending. This lender’s training will also encompass the
fair lending obligations of banks under the Fair Housing Act, the
Equal Credit Opportunity Act, and the Community Reinvestment Act.
The branch will offer the full range of banking and residential
lending services offered by Centier. Further, the branch will
provide access to small business lending services and expertise
comparable to that provided at the Bank’s branches in majority
white census tracts.
10. Centier will make all reasonable efforts, subject to
local government and regulatory approval, to open or acquire a
second new branch in a majority African-American census tract
within twenty-four (24) months of the entry of this Order.
Centier will place at least one full-time residential lender at
this office, fully trained in all aspects of home mortgage and
home equity lending. This lender’s training will also encompass
the fair lending obligations of banks under the Fair Housing Act,
the Equal Credit Opportunity Act, and the Community Reinvestment
Act. The branch will offer the full range of banking and
residential lending services offered by Centier. Further, the
branch will provide access to small business lending services and
expertise comparable to that provided at the Bank’s branches in
majority white census tracts.
11. To meet the target dates for the opening of these new
branches, the Bank shall act as quickly as possible to obtain any
required local or state governmental permits and approvals and to
seek the approval of its federal regulator, currently the Federal
Deposit Insurance Corporation.
12. The Bank shall ensure that its existing Gary branch
offers the full range of banking and residential lending services
offered by Centier. Further, the branch will provide access to
small business lending services and expertise, comparable to that
provided at the Bank’s full-service branches located in majority
white census tracts. The Bank shall also ensure the ready
availability of complete information concerning access to the
full range of its banking and lending services at its existing
in-store branch located in Hammond, comparable to that
information provided at the Bank’s in-store branches located in
majority white census tracts. The Bank shall further ensure that
these comparable levels of service and information will be
provided at all future branches in Gary, Hammond and East
Chicago.
13. Nothing in this Order precludes the Bank from opening
or acquiring additional branch offices in the designated census
tracts or elsewhere. Nor does any provision of this Order
require the Bank to consult with the United States regarding its
opening or acquisition of any other branches or offices except as
required by law.
Staff
14. For the duration of this Order, Centier shall continue
to employ a full-time Director of Community Lending, whose
primary responsibilities will include overseeing the development
of the Bank’s lending in the designated census tracts and
compliance with the provisions of this Order. The Director will
supervise the activities of loan officers regarding the
solicitation and origination of loans in the designated census
tracts, including the special loan programs identified in this
Order; coordinate the Bank’s involvement in community lending
initiatives and outreach programs; serve as a resource to lending
staff to encourage and develop more lending within the designated
census tracts; ensure the training of the staff at all branch
offices (both existing and new) in the designated tracts in all
aspects of the Bank’s lending processes; and report directly to
the Bank’s Board of Directors on the progress of these
initiatives at least quarterly, including recommending changes in
these programs to increase their effectiveness. At least one
bank employee who is fluent in Spanish and has been fully trained
to handle lending transactions will be available at the newly-expanded branch office in East Chicago. This person, a current
loan officer already identified by Centier for this purpose,
shall be responsible for developing community lending initiatives
and outreach programs to attract customers from and serve the
lending needs of the Hispanic communities.
15. The Bank shall provide periodic training to all
employees and agents with significant involvement in residential
and CRA small business lending to ensure that their activities
are conducted in a nondiscriminatory manner. This training shall
encompass their fair lending obligations under the FHA, the ECOA,
their obligations under the CRA, and their responsibilities under
this Order. Such training shall be conducted by Centier’s
Director of Community Lending, Manager of Mortgage and Consumer
Lending, and training and education staff. In addition, within
fifteen (15) days of the entry of this Order, the Bank shall
provide to all such employees an explanation and copies of the
applicable provisions of this Order, and allow an opportunity for
such employees to have any questions concerning the Order
answered.
Advertising and Outreach
16. The Bank shall expand its marketing, advertising, and
outreach programs to improve its performance in meeting the
credit needs of the residents and businesses in majority minority
census tracts in the Gary metropolitan area.
17. The Bank shall spend a minimum of $375,000 on the
targeted advertising and marketing campaign described in
paragraphs (a)-(d) below over the term of this Order. This
program shall be specifically targeted to generate significant
additional numbers of applications for all types of its credit
products from qualified residents and small businesses in
majority minority census tracts. This program shall include, at
a minimum, the following components:
(a) Print Media. During each year of this Order, in
addition to any other print advertising, the Bank shall advertise
in at least one print medium specifically directed to African-American readers and at least one print medium directed to
Hispanic readers. These advertisements, viewed in their entirety
over the course of a year, shall include the Bank’s full range of
principal credit products, including any special products or
services made available as part of this Order.5
The Bank retains
the discretion to determine the size, content, and frequency of
such advertising subject to the standards set forth above. In
Spanish or other foreign language publications, the text of the
majority of the advertisements shall be in the language commonly
used by the readers of such publications. The Bank may choose to
expand this targeted advertising in additional print media
directed to African-American, Hispanic, or other minority
readers.
(b) Radio. During each year of this Order, the Bank shall
place radio advertisements on at least two minority-oriented
Gary-area radio stations, at least one whose programming is
oriented toward African-American listeners and one oriented
toward Hispanic listeners. The radio advertising, viewed in its
entirety over the course of a year, shall include the Bank’s full
range of principal loan products, including any special products
or services made available under this Order. The Bank retains
the discretion to determine the content and frequency of such
radio spots subject to the standards set forth above and to place
such advertising on additional minority-oriented stations.
The parties acknowledge that the Bank has already begun
frequent advertising in media targeted to African-American and
Hispanic audiences.
(c) Promotional Materials. The Bank shall create point-of-distribution materials, such as posters and brochures, targeted
toward the subject areas to advertise products and services it
offers, including any special loan products or services made
available pursuant to this Order. These materials shall be
published in English, Spanish, and any other foreign languages
commonly used in the Gary metropolitan area. The Bank shall
place or display these promotional materials in its branch
offices and additional, appropriate distribution locations
throughout the designated census tracts.
(d) Direct Mailings. The Bank also may utilize direct
mailing to advertise the new branch locations and/or the loan
program required by this Order to residents and small businesses
in the designated census tracts, so long as those mailings are
not targeted exclusively or primarily at existing customers.
(e) All of the Bank’s print advertising and promotional
materials shall contain an equal housing opportunity logotype,
slogan, or statement. All of the Bank’s radio and television
advertisements shall include the audible statement “Equal
Opportunity Lender” or “Prestamista que provee igualdad de
oportunidad al préstamo” [Spanish translation].
(f) In addition to the targeted efforts described in
subparagraphs (a)-(d), during the term of this Order, the Bank
will conduct a minimum of six (6) outreach programs per year for
real estate brokers and agents, developers, and public or private
entities doing business in majority minority census tracts, to
inform them of the products and services the Bank offers,
including those detailed in this Order, and to otherwise develop
business relationships with them. These programs shall be
offered at locations reasonably convenient to the business
operations of the attendees.
Credit Needs Assessment
18. Within two (2) months of the entry of this Order, the
Bank shall begin an assessment of the residential real estate-related and small business credit needs of the Gary area’s
majority minority census tracts. This assessment shall include,
but not be limited to: (a) analysis of the most recent available
demographic and socioeconomic data about those census tracts; (b)
evaluation of the residential and small business credit needs of
and corresponding lending opportunities in majority minority
census tracts; (c) consideration of how the Bank’s residential
and small business lending operations can serve the remedial
goals of this Order; and (d) thorough review of the availability
of relevant federal, state, and local governmental programs and
evaluation of how participation in each of them would assist in
achieving the remedial goals of this Order. The Bank may retain
outside parties to provide expert analysis and assistance in
performing this assessment.
19. In accomplishing this assessment, Bank representatives
shall also meet with representatives of at least six (6) Gary
metropolitan area community organizations significantly involved
in promoting fair lending, home ownership, or residential or
small business development in majority minority census tracts.
The Bank may also meet with representatives of any other
appropriate entities in conducting this needs assessment.
20. The Bank shall present to counsel for the United States
a written report of this special credit needs assessment,
together with recommendations, if any, for actions beyond those
specified in this Order to be taken to meet those needs, not
later than six (6) months after the entry of this Order.
21. For the term of this Order, the Bank shall meet
annually with community organizations as part of an ongoing
credit needs assessment and evaluation of its business plan, in
order to better meet the residential and small business credit
needs of the residents and small businesses in the designated
census tracts.
Consumer Education
22. The parties acknowledge that financially educated
consumers are essential to the remedial goal of sustained
increases in the Bank’s residential and small business lending in
majority minority census tracts in the Gary metropolitan area.
To help identify and develop qualified loan applicants from
majority minority census tracts, the Bank shall invest a minimum
of $500,000 over the term of this Order to provide credit
counseling, financial literacy, business planning, and other
related educational programs targeted at the residents and small
businesses in these areas.6 The parties acknowledge that Centier
has engaged in providing such educational programs since late
2004.
The Bank shall allocate a minimum of one-half of this
$500,000 to sponsor such programs offered by community or
governmental organizations engaged in fair lending work. Such
programs shall also be offered where appropriate in Spanish and
any other foreign languages commonly used in the Gary area’s
majority minority census tracts.
SATISFACTION OF UNITED STATES’ CLAIMS FOR MONETARY RELIEF
23. In addition to the monetary commitments detailed above,
Centier will invest a minimum of $3.5 million over the duration
of this Order in the special financing program described below
for residential and CRA small business loans.7> When combined
with the other financial commitments described herein, this
special lending program will satisfy fully the claims of the
United States for damages and other monetary relief in this case.
24. Through this special financing program for these
categories of loans, the Bank will offer qualified residents and
businesses (for CRA small business loans) in majority minority
census tracts loan products at interest rates and/or on terms
that are more advantageous to the applicant than it would
normally provide.
25. The Bank will subsidize each covered transaction by one
or more of the following means: an interest rate below that which
the Bank would normally charge, down payment or closing cost
grants or assistance, or other financial aid.8 Under this
special financing program, the Bank may provide one or more of
the following forms of financial assistance to any qualified
applicant:
(a) a loan for a home purchase, refinancing, or home
improvement at an interest rate a minimum of 1/2 of a percentage
point (50 basis points) below the otherwise prevailing rate,
provided that if the prevailing rate (APR) for any such loan
exceeds 8% at any time during the term of this Order, the
interest rate subsidy shall be a minimum of 1%, and if the
prevailing APR exceeds 9% at any time during the term of this
Order, the subsidy shall be a minimum of 1.5%;
(b) a home purchase loan at the Bank’s prevailing prime
interest rate for a conventional fixed-interest rate mortgage to
a borrower who would ordinarily not qualify for such rates for
reasons including, for example, the lack of required credit
quality, income, or down payment;
(c) a direct grant of a minimum of 2% of the loan amount, up
to a maximum of 3% for the purpose of down payment assistance; or
(d) closing cost assistance in the form of a direct grant of a
minimum of $500.00 and a maximum of $1,000.00.
26. The Bank retains the discretion to offer more than one,
or all, of the foregoing forms of financial assistance to
qualified applicants on an individual basis as it deems
appropriate under the unique factual circumstances of a
particular application. The Bank will exercise this discretion
in a manner which maximizes the likelihood that it will originate
a loan to a qualified applicant, consistent with applicable
underwriting guidelines and safety and soundness standards.
27. The Bank shall have discretion to provide the loan
subsidy among its residential and CRA small business loan
products. However, the Bank shall use its best efforts to
implement this subsidy program in a manner such that, of the
total dollar volume of loans each year subsidized by this special
program, at least 25% are CRA small business loans.
28. Although all residents or businesses in any of the
designated census tracts may be eligible for assistance under
this special financing program, the Bank shall take appropriate
steps to promote an equitable distribution of these investment
funds among all the designated census tracts.
29. No provision of this Order, including this special
financing program commitment, requires the Bank to make any
unsafe or unsound loan. During the term of this Order, the Bank
shall assess the effectiveness of this special financing program
in achieving its remedial goal and shall recommend to the United
States any changes it reasonably believes are necessary and
appropriate to increase its effectiveness.
EVALUATING AND MONITORING COMPLIANCE
30. For the duration of this Order, Centier shall retain
all records relating to its obligations hereunder, including its
residential and small business lending activities, as well as its
advertising, outreach, branching, special programs, and other
compliance activities as set forth herein. The United States
shall have the right to review and copy such records upon
request.
31. The Bank shall provide to counsel for the United States
the data it submits to the Federal Financial Institutions
Examination Council (FFIEC) pursuant to the Home Mortgage
Disclosure Act and the Community Reinvestment Act. The data will
be provided in the same format in which it is presented to the
FFIEC within thirty (30) days of its submission to the FFIEC each
year for the duration of this Order, including the record layout.
32. In addition to the submission of any other plans or
reports specified in this Order, Centier shall make an annual
report to the United States on its progress in fulfilling the
goals of this Order. Each such report shall provide a complete
account of the Bank’s actions to comply with each requirement of
this Order during the previous year, an objective assessment of
the extent to which each quantifiable obligation was met, an
explanation of why any particular component fell short of meeting
its goal for that year, and any recommendations for additional
actions to achieve the goals of this Order. The Bank shall
submit this report each year for the term of this Order within
forty-five (45) days of the anniversary of the date of the entry
of this Order. In addition, the Bank shall attach to the annual
reports representative copies of training material and
advertising and marketing materials disseminated pursuant to this
Order.
ADMINISTRATION
33. The requirements of this Order shall be in effect for
five (5) years, except as specified below. The Order shall
terminate: (a) three months after the submission of the Bank’s
fifth annual report to the United States; or (b) if the Bank has
not invested $3.5 million in its special financing program in
five (5) years from the date of entry of this Order, three months
after the submission of the Bank’s final annual report to the
United States that demonstrates the fulfillment of that
obligation. It shall only be extended further upon motion of the
United States to the Court, for good cause shown.
34. Any time limits for performance fixed by this Order may
be extended by mutual written agreement of the parties. Other
modifications to this Order may be made only upon approval of the
Court, by motion by either party. The parties recognize that
there may be changes in relevant and material factual
circumstances during the term of this Order which may impact the
accomplishment of its goals. The parties agree to work
cooperatively to discuss and attempt to agree upon any proposed
modifications to this Order resulting therefrom.
35. In the event that any disputes arise about the
interpretation of or compliance with the terms of this Order, the
parties shall endeavor in good faith to resolve any such dispute
between themselves before bringing it to this Court for
resolution. The United States agrees that if it reasonably
believes that the Bank has violated any provision of this Order,
it will provide the Bank written notice thereof and give it sixty
(60) days to resolve the alleged violation before presenting the
matter to this Court. In the event of either a failure by the
Bank to perform in a timely manner any act required by this Order
or an act by the Bank in violation of any provision hereof, the
United States may move this Court to impose any remedy authorized
by law or equity, including attorneys’ fees and costs.
36. Centier’s compliance with the terms of this Order shall
fully and finally resolve all claims of the United States
relating to the Bank’s alleged violation of the fair lending laws
by means of discriminating on the basis of race, color, or
national origin, as alleged in the Complaint in this action,
including all claims for equitable relief and monetary damages
and penalties. Each party to this Consent Order shall bear its
own costs and attorney's fees associated with this litigation.
37. The Court shall retain jurisdiction for the duration of
this Consent Order to enforce the terms of the Order, after which
time the case shall be dismissed with prejudice.
SO ORDERED, this 16TH day of October , 2006.
_____________________________________
/s/
UNITED STATES DISTRICT JUDGE
The undersigned hereby apply for and consent to the entry of this
Order:
|
For Centier Bank:
______________________________
/s/
Deborah J. Daniels, Esq.
Krieg DeVault LLP
Suite 2800
One Indiana Square
Indianapolis, IN 46204
317-238-6253
______________________________
/s/
John W. Tanselle, Esq.
Krieg DeVault LLP
Chief, Housing and Civil
Suite 2800
Enforcement Section
One Indiana Square
Indianapolis, IN 46204
(317) 238-6216
|
For the United States:
______________________________
/s/
Wan J. Kim
Assistant Attorney General
Civil Rights Division
Steven H. Rosenbaum
______________________________
/s/
Donna M. Murphy
Deputy Chief
______________________________
/s/
Burtis M. Dougherty
Anthony F. Archeval
U.S. Department of Justice
Civil Rights Division
Housing and Civil Enforcement
Section NW Building
950 Pennsylvania Avenue, N.W.
Washington, D.C. 20530
(202) 514-4737 |
1. For the purposes of this Order, the term "majority minority" or "minority" census tract is defined to mean a census tract whose population is more than 50% other than non-Hispanic white. The term "majority white" or "white" census tract is defined to mean a census tract whose population is more than 50% non-Hispanic white. The minority census tracts, based on the 2000 Census, are listed on Exhibit A hereto.
2.For the purposes of this Order, the term "Gary metropolitanarea" means the counties of Lake and Porter.
3. Robin Newberger & Marina Plavnik, Federal Reserve Bank of Chicago, Gary Indiana Metropolitan Statistical Area: MSA Profile and Investment Opportunities (December 2001).
4.Since that time, the Bank has further expanded its assessment area.
5. The Bank need not include every credit product it offers in each advertisement, but must include in this targeted advertising over the course of a year the Bank's principal products and all special credit products or programs available under the terms of this Order.
6.Reasonable costs associated with the development and implementation of this consumer education initiative may be included in the calculation of the amount invested by the Bank.
7.With respect to the Bank's home mortgage subsidy program, no loan originated under this program shall exceed the conforming loan limit applicable to Fannie Mae and Freddie Mac, as determined annually by the Federal Housing Finance Board. (currently $417,000).
8.For purposes of this Order, the loan subsidy amountcalculation will be the reduction in the monthly payment from thestandard monthly payment based on the borrowers qualificationswhich result from the interest rate reduction the borrowerreceives (amortized over the full term of the loan) times thenumber of monthly payments for the time periods as set forthbelow for various loan types:
(a) First mortgages at 7.5 years;
(b) Home equity loans and lines of credit at 5 years; and,
(c) Small business and community development loans at theterm of the note (generally 1 to 5 years).
Document Filed: October 13, 2006
