Midland States Bancorp Settles With HUD Over Fair Housing Act Violations

Posted by Patrick Barnard on October 03, 2014 No Comments
Categories : Residential Mortgage

Midland States Bancorp will originate $8 million in mortgage loans in majority-minority neighborhoods over the next three years in order to settle allegations brought by the U.S. Department of Housing and Urban Development (HUD) that it avoided doing business in predominantly African American and Hispanic neighborhoods in St. Louis, Mo., and northern Illinois.

The settlement is the result of a housing discrimination complaint that was filed by Metropolitan St. Louis Equal Housing and Opportunity Council (EHOC), a HUD Fair Housing Initiatives Program agency, which alleged that Midland delineated its service area in a discriminatory manner that excluded areas of high minority concentration, a practice known as redlining.

EHOC claims the bank intentionally located its branches in areas that would not provide equal access for minorities. In addition, it is accused of failing to market residential real estate loans in African American and Hispanic communities.

As per the agreement, the bank must establish a $550,000 subsidy fund to provide discounted home purchases or home refinancing loans in majority-minority markets in St. Louis, central Illinois/Champaign, and northern Illinois and/or Joliet.

HUD also ordered the bank to originate $3 million in home repair loans in majority-minority census tracts and also establish a $400,000 subsidy fund for affordable home repair loans that will assist homeowners in majority-minority census tracts in St. Louis and northern Illinois, including Joliet, where many residents experienced financial distress and deferred maintenance on their properties.

What's more, the bank must originate an aggregate of $4 million in loans for multifamily housing located in majority-minority census tracts in St. Louis and northern Illinois over the next three years and also must open a full-service branch in Joliet, a loan production branch in St. Louis and, tentatively, a full service branch in St. Louis.

Finally, the bank must provide financial education for individuals and small businesses, support for training and education, and $200,000 for EHOC, as part of its conciliation agreement with HUD.

‘Today's settlement demonstrates HUD's ongoing commitment to addressing lending discrimination, no matter what form it takes,’ says Gustavo Velasquez, assistant secretary for fair housing and equal opportunity for HUD, in a statement. ‘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.’

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