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Illinois Bank Settles Over Alleged Fair Housing Violations

market-studiesMidland States Bancorp agreed last week to originate millions of dollars of mortgages in predominantly minority neighborhoods as part of a settlement to resolve allegations of lending discrimination.

Midland States Bancorp, headquartered in Effingham, Illinois, will originate $8 million in mortgage loans in minority neighborhoods over the next three years to resolve charges that it previously avoided doing business or establishing branches in predominantly black and Hispanic neighborhoods in St. Louis and northern Illinois, according to an announcement from HUD.

The settlement comes as a result of a housing discrimination complaint filed against the bank by the Metropolitan St. Louis Equal Housing and Opportunity Council (EHOC), a HUD Fair Housing Initiatives Program agency.

According to EHOC's complaint, Midland States Bancorp deliberately segmented its service area in a manner excluded areas of high minority concentration, a practice referred to as "redlining." EHOC also alleged the bank located branches in a way that did not give equal access to customers based on race and national origin and also that the bank failed to market mortgage loans in black and Hispanic communities.

All charges constitute violations of the Fair Housing Act, which prohibits denying or changing the terms of a loan based on race, sex, disability, or other traits.

In addition to providing $8 million in mortgage loans, HUD reports the bank has also agreed to originate $3 million in home repair loans in minority census tracts and an aggregate $4 million in loans for multifamily housing in those areas over the next three years.

Midland States Bancorp will also create a $550,000 subsidy fund to provide discounted home purchases or refinance loans in minority markets in St. Louis, Central Illinois, and Northern Illinois, setting aside an additional $400,000 fund for affordable home repair loans.

Furthermore, the bank will open a full-service branch in Joliet, Illinois, a loan production branch in St. Louis, and, tentatively, a full-service branch in St. Louis. All will be located in minority neighborhoods.

The agreement also provides funding for affirmative marketing to African Americans and Hispanics, financial education for individuals and small businesses, support for training and education, and $200,000 for EHOC, HUD announced.

"Today's settlement demonstrates HUD's ongoing commitment to addressing lending discrimination, no matter what form it takes," said Gustavo Velasquez, HUD's assistant secretary for Fair Housing and Equal Opportunity. "Everyone, regardless of their race or national origin, should have equal access to banking services and HUD will continue to take appropriate action to end discriminatory practices."

About Author: Tory Barringer

Tory Barringer began his journalism career in early 2011, working as a writer for the University of Texas at Arlington's student newspaper before joining the DS News team in 2012. In addition to contributing to DSNews.com, he is also the online editor for DS News' sister publication, MReport, which focuses on mortgage banking news.
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