(Reuters) -The U.S. Justice Department and the Consumer Financial Protection Bureau penalized Fairway Independent Mortgage Corporation for alleged redlining in Black neighborhoods in Birmingham, Alabama, the agencies said on Tuesday.
The mortgage lender will pay a $1.9 million penalty and provide $7 million in loan subsidies as a result, the CFPB said in a statement.
“This case is a reminder that redlining is not a relic of the past and the Justice Department will continue to work urgently to combat lending discrimination wherever it arises,” U.S. Attorney General Merrick Garland said.
Garland said the enforcement action was part of a Justice Department initiative to combat redlining, which is the illegal practice of restricting mortgage lending to certain areas based on occupants’ race or ethnicity and was banned in 1974.
The company did not immediately respond to requests for comment. According to a proposed consent order, Fairway neither admits nor denies the allegations.
Officials accuse the company of failing to take action when its own data showed the company was not serving majority Black areas between 2018 and 2022 and of focusing its marketing efforts in majority-white areas between 2015 and 2022.
As part of a proposed consent order, the company will also pay at least $1 million to open a new office in a majority-Black neighborhood, including advertising, outreach, consumer financial education and community partnerships.
(Reporting by Douglas Gillison; editing by Jonathan Oatis and Aurora Ellis)
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