The Justice Department announced today that Washington Trust Company (Washington Trust), the oldest community bank in the nation, has agreed to pay $9 million to resolve allegations that it engaged in a pattern or practice of lending discrimination by redlining majority-Black and Hispanic neighborhoods in Rhode Island.
Redlining is an illegal practice in which lenders avoid providing credit services to individuals living in communities of color because of the race, color or national origin of residents in those communities.
“This settlement should send a strong message to banks regarding the Justice Department’s firm commitment to combat modern-day redlining and ensure that all lenders are providing equal access to home loan opportunities to communities of color,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “This resolution will provide critical relief to impacted Black and Hispanic communities, enabling them to buy a home, keep their home or access the equity in their home. Ending redlining and providing relief to communities of color impacted by this unlawful practice is a necessary step in ongoing efforts to reduce racial wealth and homeownership gaps across our country.”
“Everyone who pursues the American dream has the right to expect to be treated equally and with dignity, regardless of their race, their background, or zip code. When communities are denied access to fair lending, families are denied the opportunity to build stability and financial success,” said U.S. Attorney Zachary A. Cunha for the District of Rhode Island. “I am pleased that, as a result of the hard work of attorneys in my office and the department’s Civil Rights Division, Washington Trust has agreed to take targeted and extensive measures to make meaningful lending services available for all Rhode Islanders, regardless of race or background.”
The complaint alleges, from 2016 through at least 2021, Washington Trust failed to provide mortgage lending services to majority-Black and Hispanic neighborhoods in Rhode Island. The complaint alleges that despite expansion across the state of Rhode Island, Washington Trust has never opened a branch in a majority-Black and Hispanic neighborhood. The complaint alleges that Washington Trust relied on mortgage loan officers working out of only majority-white areas as the primary source for generating loan applications, and Washington Trust failed to train or incentivize its lending staff or conduct outreach, marketing and advertising of its mortgage services to compensate for its lack of branches and presence in majority-Black and Hispanic areas. The complaint further alleges that, compared to Washington Trust, over the same six-year period, other banks received nearly four times as many loan applications each year in majority-Black and Hispanic neighborhoods in Rhode Island. The complaint also alleges that, even when Washington Trust generated loan applications from majority-Black and Hispanic areas, the applicants themselves were disproportionately white.
Under the proposed consent order, which is subject to court approval, Washington Trust has agreed to do the following:
- Invest at least $7 million in a loan subsidy fund to increase access to home mortgage, home improvement, home refinance and home equity loans and lines of credit for residents of majority-Black and Hispanic neighborhoods in Rhode Island;
- Spend $1 million on community partnerships to provide services that increase residential mortgage credit access for residents of those neighborhoods;
- Spend $1 million for advertising, outreach, consumer financial education and credit counseling focused on majority-Black and Hispanic neighborhoods;
- Open two new branches in majority-Black and Hispanic neighborhoods in Rhode Island; and ensure at least two mortgage loan officers are dedicated to serving these neighborhoods; and
- Employ a Director of Community Lending who will oversee the continued development of lending in communities of color.
Washington Trust also agreed to complete a community credit needs assessment, to assess and report on its fair lending program; and to train staff on the bank’s obligations under the consent order. Washington Trust worked cooperatively with the department to resolve and remedy the redlining concerns that were identified and agreed to settle this matter without contested litigation.
In October 2021, Attorney General Merrick B. Garland and Assistant Attorney General Kristen Clarke launched the Justice Department’s Combating Redlining Initiative, a coordinated enforcement effort to address this persistent form of discrimination against communities of color. Since 2021, the department has announced nine redlining cases and secured $98 million in relief for communities of color that have been the victims of lending discrimination across the country.
A copy of the complaint and information about the department’s fair lending enforcement can be found at www.justice.gov/fairhousing. Individuals may report lending discrimination by calling the Justice Department’s housing discrimination tip line at 1-833-591-0291 or submitting a report online.