Consumer Bureau Action Tracker

CFPB v. Hudson City Savings Bank


State

Connecticut, New Jersey, New York

target

Hudson City Bank

Topics

Enforcement, Mortgages, Fair Lending, Home Mortgage Disclosure Act (HMDA), Redlining

The CFPB, along with the Department of Justice, fined Hudson City Savings Bank “nearly $33.5” in 2015, alleging “its executives did what they could to keep” black and Hispanic customers “out” by employing racially prejudiced mortgaging practices. This included “systematically avoiding minority communities” while “marketing mortgages in predominantly white sections of suburban New Jersey and Long Island.” The CFPB also got the bank to “open two full-service branches in minority neighborhoods, to increase outreach to those neighborhoods, and to invest $25 million in a loan-subsidy fund to increase the amount of credit extended to black and Hispanic borrowers.”

  • Case number 2:15-cv-07056 was filed in U.S. District Court for the District of New Jersey. At the time of this case, Hudson City Savings Bank, “based in Paramus, N.J.,” was New Jersey’s largest savings bank and the nation’s seventh largest. [Rachel Swarns, “Long Banned, Mortgage Bias Is Back as Issue,” The New York Times, 10/31/15]
  • “The green welcome sign hangs in the front door of the downtown branch of Hudson City Savings Bank, New Jersey’s largest savings bank. But for years, federal regulators said, its executives did what they could to keep certain customers out. They steered clear of black and Hispanic neighborhoods as they opened branches across New York and Connecticut, federal officials said. They focused on marketing mortgages in predominantly white sections of suburban New Jersey and Long Island, not here or in Bridgeport, Conn. The results were stark. In 2014, Hudson approved 1,886 mortgages in the market that includes New Jersey and sections of New York and Connecticut, federal mortgage data show. Only 25 of those loans went to black borrowers.” [Rachel Swarns, “Long Banned, Mortgage Bias Is Back as Issue,” The New York Times, 10/31/15]
  • The bank, in a process known as “redlining,” approved “1,886 mortgages in the market that includes New Jersey and sections of New York and Connecticut,” only 25 of which were granted to black borrowers. Federal officials claimed that the bank was “systematically avoiding minority communities as it expanded beyond its New Jersey roots into New York and Connecticut.” “Of the 54 branches that Hudson acquired or opened from 2004 to 2010, only three were in predominantly black or Hispanic neighborhoods,” the lawsuit stated. “The bank stationed only 12 of its 162 mortgage brokers” in these minority neighborhoods. Government analysis indicated that “Hudson’s competitors generated nearly three times as many home loan applications from predominantly black and Hispanic communities.” [Rachel Swarns, “Long Banned, Mortgage Bias Is Back as Issue,” The New York Times, 10/31/15]
  • The bank agreed in September 2015 “to pay nearly $33 million to settle a lawsuit filed by the Consumer Financial Protection Bureau and the Justice Department” and a $5.5 million penalty. At the time, this was the CFPB’s largest settlement “for redlining, the practice in which banks choke off lending to minority communities.” The settlement included an agreement by the bank “to open two full-service branches in minority neighborhoods, to increase outreach to those neighborhoods, and to invest $25 million in a loan-subsidy fund to increase the amount of credit extended to black and Hispanic borrowers.” [Rachel Swarns, “Long Banned, Mortgage Bias Is Back as Issue,” The New York Times, 10/31/15]

Status

Inactive or Resolved


2:15-cv-07056 11/4/2015 11/4/2015

CFPB and DOJ Order Hudson City Savings Bank to Pay $27 Million to Increase Mortgage Credit Access in Communities Illegally Redlined
http://www.consumerfinance.gov/policy-compliance/enforcement/actions/hudson-city-savings-bank-fsb/

  • Consumer Financial Protection Bureau (CFPB)
  • Federal district court case
  • U.S. District Court for the District of New Jersey
  • Bank
  • $38,500,000
  • Not Available

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