The government has lost another bid to prematurely end a multimillion dollar redlining consent order against a bank.
The Trump administration had sought to terminate a five-year deal reached in 2022 with the New Jersey-based Lakeland Bank. A federal judge last Friday ruled the depository, now owned by Provident Bank, must continue its obligations, including distributing millions of dollars more in loan subsidies for minority borrowers in the Newark area.
The ruling marks the third defeat in the past year for feds seeking to overturn Biden-era redlining deals against lenders. A court last July blocked prosecutors' similar attempt to quash a consent order with ESSA Bank, and a judge last June rejected a regulator's
Provident, which
Fair housing groups, in an amicus brief to the court earlier this year, argued that the remaining funds could support an additional 283 families, besides the 515 mortgages Provident claims it had already supported.
In a statement Monday, a spokesperson for Provident did not answer a question about how much of the loan subsidy the bank had paid out. "We remain committed to fulfilling the terms of the original consent order with the Department of Justice," the company said.
The fair housing groups who opposed the termination request are the New Jersey Citizen Action Education Fund, the Housing Equality Center of Pennsylvania, and the National Fair Housing Alliance. In a statement Monday afternoon, the organizations and their attorneys lauded the court's decision.
"The District Court's decision is especially significant at a time when the Trump administration has sought to weaken the Community Reinvestment Act, reduce fair lending enforcement, and retreat from the federal government's historic role in combating housing and lending discrimination, said Dena Mottola Jaborska, executive director of the New Jersey Citizen Action Education Fund.
The litigation
Lakeland agreed to the consent order in 2022, neither admitting nor denying feds' accusations that it engaged in redlining behaviors between 2015 and 2021. The DOJ accused Lakeland of avoiding serving majority Black and Hispanic neighborhoods in Newark, and discouraging those consumers from applying for credit.
The depository in a previous filing said the subsidy fund, for which it can credit a maximum of $15,000 per loan, helps borrowers achieve an average interest rate reduction of 1.4% below market rate, and $150,000 in savings over the life of their loans.
The bank said it also achieved, or made progress, in other mandates in the consent order. That includes targeted advertising spending, funding community development partners, and opening two Newark area branches in the specific communities.
In arguing for termination, the bank argued the deal imposed unnecessary operational burdens. Further, continued adherence could subject the bank to reputational harm in that consumers may believe it hadn't adequately complied.
In an opinion and order, U.S. District Judge Claire C. Cecchi said the bank provided no concrete evidence to support its view of the costs and benefits of an early termination. The judge also suggested the remaining financial obligations under the deal are not trivial.
"A promise to reach substantial compliance in the future is not substantial compliance," she wrote.
Other redlining consent orders
Since taking office, the Trump administration has terminated five Biden-era redlining consent orders against Ameris Bank, Cadence Bank, Patriot Bank, Trident Mortgage and Trustmark National Bank.
While feds and banks have indicated potential court moves in other consent order cases, at least six remain in effect. Those are:
- American Bank of Oklahoma, through 2028;
- Citadel Federal Credit Union, through 2029;
- City National Bank, through 2028;
- Fairway Home Mortgage, through 2029;
- First National Bank of Pennsylvania, through 2029;
- OceanFirst Bank, through 2029.
While not a consent order, a court last year also upheld a $105,000 settlement with Chicago-based Townstone Financial. The Consumer Financial Protection Bureau attempted to undo the agreement after the company's CEO agreed to the six-figure deal in November 2024. That company's CEO today is originating loans under another Chicago-based lender.
