Government has fined OceanFirst Bank a sum of $15 million in a settlement over redlining allegations made by the Department of Justice.
OceanFirst Bank Agrees to Pay Over $15 Million to Resolve Mortgage Lending Discrimination Allegations
In a significant development, OceanFirst Bank has agreed to pay more than $15 million to settle allegations of discrimination in mortgage lending services. The settlement, which includes a conciliation agreement with the Department of Housing and Urban Development (HUD), comes after an investigation by the Department of Justice (DOJ) into potential violations of the Equal Credit Opportunity Act and Fair Housing Act.
The investigation, which was launched in February 2023, covered the period from 2018 to at least 2022. The DOJ found evidence of discriminatory practices that affected predominantly Black, Hispanic, and Asian neighborhoods in Middlesex, Monmouth, and Ocean counties, New Jersey.
Under the agreement, OceanFirst must invest at least $14 million in a loan subsidy fund to increase access to mortgage, home improvement, and refinancing loans for residents of these majority-nonwhite neighborhoods. The bank will also put another $400,000 toward community partnerships to provide credit-, homeownership-, and foreclosure prevention-related services for people in these areas.
OceanFirst has also agreed to open a loan production office and maintain a recently opened full-service branch in majority-nonwhite areas of the specified counties. At least one mortgage loan officer will be assigned to each location. The bank's staff will be trained on fair lending, and a director of community lending will be hired to oversee home mortgage lending in communities of color.
The bank will also evaluate its fair lending compliance management systems and spend $700,000 on advertising, outreach, consumer financial education, and credit counseling targeting predominantly Black, Hispanic, and Asian neighborhoods.
OceanFirst attributes some of the faults to its 2018 purchase of Sun National Bank. Regulatory delays were cited as the reason a proposed tie-up with Partners Bank fell apart in November 2022. Partners Bank, originally involved in a $186 million deal with OceanFirst, was eventually sold to Camp Hill, Pennsylvania-based LinkBank in a deal worth roughly $167.8 million.
The DOJ's anti-redlining campaign has collected $137 million in relief, with the OceanFirst settlement being the 13th. The settlement awaits court approval, and OceanFirst must perform a community credit needs assessment as part of the agreement.
It is important to note that this settlement is specific to OceanFirst Bank in New Jersey, and there are no direct allegations or settlements related to mortgage lending discrimination by OceanFirst Bank in New Jersey found in the current search results. However, lending discrimination cases and agreements involving other banks have been reported in various geographic areas.
The Office of the Comptroller of the Currency (OCC) flagged the bank to the Department of Justice (DOJ) in December 2022. The most recent penalty in the campaign was paid by Pittsburgh-based First National Bank of Pennsylvania in February, which agreed to pay $13.5 million.
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In the settlement, OceanFirst Bank will invest a substantial amount towards creating a loan subsidy fund and community partnerships, focusing on increasing access to mortgage loans for majority-nonwhite neighborhoods in Middlesex, Monmouth, and Ocean counties, New Jersey. The bank's agreement also includes hiring a director of community lending, opening loan production offices, and training staff on fair lending practices, as part of an effort to rectify accused discrimination in business and finance services.
