Two nonprofit groups allege that a national bank with 70 branches in Southern California deftly placed branches outside Los Angeles' most predominantly minority neighborhoods and, in the process, denied people of color home loans. While a business can locate its operations wherever it pleases, banks can't discriminate under federal law.
The nonprofits, the California Reinvestment Coalition and the Fair Housing Advocates of Northern California, filed a complaint with the U.S. Department of Housing and Urban Development (HUD) this week against OneWest Bank and its parent company, New Jersey–based CIT Group, claiming that they violated the Fair Housing Act. The complaint asks HUD to investigate.
Matt Klein, CIT Group director of communications and government relations, said via email, "CIT is committed to fair lending and works hard to meet the credit needs of all communities and neighborhoods we serve."
The nonprofits conducted an analysis of data from 2014 and 2015 that found OneWest branches allegedly cling to the whiter parts of the Los Angeles map, exacerbating minorities' lack of equal access to home loans. The results were the same in other parts of the state, the groups said.
"The complaint alleges that OneWest Bank has violated the Fair Housing Act (FHA) through redlining practices such as failing to locate branches in communities of color and extending very few or no mortgage loans to borrowers of color," according to a statement from the organizations. "It also alleges OneWest maintained and marketed REO [bank-owned] homes in predominantly white neighborhoods better than in neighborhoods of color."
Asian-American, African-American and Latino neighborhoods were all affected, the complaint says.
"[I]ts home loans to borrowers and communities of color are low in absolute terms, low compared to its peer banks and low when compared to what one would expect, given the size of the Asian-American, African-American and Latino populations in California," Kevin Stein, deputy director of the California Reinvestment Coalition, said in a statement. "During 2014 and 2015, OneWest originated exactly two mortgage loans to African-American borrowers in its assessment area. OneWest was far more likely to foreclose in communities of color than to make loans available to people in these communities.
"We call on HUD to fully investigate CIT’s redlining practices and to hold the bank accountable for its actions and the harm it has caused to communities.”
The complaint alleges that the bank ensured that its own homes for sale (known as REO properties, for real estate owned) in whiter neighborhoods were presentable and ready for buyers while those in communities of color "looked abandoned, had trash strewn about the yard and boarded up doors and windows, and weren’t clearly marketed as 'for sale,'" according to Caroline Peattie, executive director of Fair Housing Advocates of Northern California.
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The analysis found that while Greater L.A. has 52 OneWest branches, only eight are in majority minority U.S. Census Bureau tracts — all in Latino areas (Latinos compose half the city's population). Predominantly Asian-American and African-American tracts had zero branches, it found. (There's a branch on Fourth Street in Koreatown, but don't let the neighborhood's name fool you: Latinos are the area's biggest ethnic group.)
"The evidence included in this complaint suggests that OneWest Bank has steered clear of people of color in its assessment areas for a number of years," Sharon Kinlaw, executive director of the Fair Housing Council of San Fernando Valley, said in a statement. "We want to know how many people were harmed and we look forward to learning what HUD finds out."