HUD, First-Citizens Bank Resolve Discriminatory Lending Compliant

HUD announced an agreement Wednesday with South Carolina-based First-Citizens Bank & Trust Company, resolving racial discriminatory lending allegations.

According to HUD, the bank was allegedly denying loans to African-American, Latino, and Asian American mortgage applicants at a disproportionately higher rate than white applicants.

The investigation surrounded retail loans that were originated by the bank’s predecessor, First Citizens Bank and Trust Co., in 2010 and 2011.

After analyzing 2010 Home Mortgage Disclosure Act (HMDA) data in 2011, HUD filed a complaint against First Citizens Bank and Trust Co. The South Carolina-based bank was merged into First-Citizens Bank & Trust Company, a North Carolina-chartered commercial lender in January 2015.  HUD said that as the successor, First-Citizens Bank & Trust Company continued to cooperate with HUD throughout this investigation and ultimate resolution announced today.

In response to the agreement, Barbara Thompson, a spokesperson for First-Citizens Bank, told MReport, "First-Citizens fully cooperated with HUD through the investigation and in negotiating the resolution. The agreement does not admit any liability and recognizes the positive efforts the bank has made in the past and continues to make toward providing homeownership opportunities in underserved communities. The resolution align our common goals of fair housing and access to credit and serves to foster stronger communities."

HUD reported that First-Citizens has agreed to take several steps to ensure and protect equal access to credit including refraining from unlawful consideration of race or national origin when selecting sites for branch offices and services offered, conducting marketing, and defining Community Reinvestment Act assessment areas.

In addition, HUD stated that First-Citizens will:

• Make $140,000 available to nonprofit organizations that provide credit and housing counseling, financial literacy training, and related programs to first-time homebuyers in South Carolina;
• Adopt a new standardized and objective set of guidelines for a second review of retail channel residential loan applications initially denied by the automated underwriting system;
• Require all of its employees and agents who have substantial involvement in manual underwriting of mortgages in their retail channel to attend fair housing training;
• Hire three mortgage banker market specialists that will focus on diverse lending in the Charleston-North Charleston-Summerville, Columbia, and Greenville-Anderson-Mauldin metro areas;
• Spend $20,000 for affirmative marketing, advertising and outreach to residents in majority-minority census tracts in South Carolina; and
• Partner with non-profit or community groups to conduct at least 24 financial education programs in South Carolina for individuals and small business owners.

“This agreement aligns our shared goals of promoting fair housing and expanding access to credit for qualified working families," said Gustavo Velasquez, HUD’s Assistant Secretary for Fair Housing and Equal Opportunity. "HUD will use its enforcement powers to ensure that everyone has equal access to credit regardless of what they look like or where they come from.”

Click here to read the agreement announced today.