Justice Department Reaches Agreement with Citadel Federal Credit Union to Resolve First-Ever Redlining Action Against Credit Union

Press Release

Pending Court Approval, Citadel Will Pay over $6.5 Million to Increase Credit Opportunities and Open Three Branches in Predominantly Black and Hispanic Neighborhoods in Philadelphia

PHILADELPHIA, PA - The United States Department of Justice announced today that Citadel Federal Credit Union (Citadel) has agreed to resolve allegations that it engaged in a pattern and practice of lending discrimination by "redlining" predominantly Black and Hispanic neighborhoods in and around Philadelphia. If approved by the court, this redlining resolution would be the Justice Department's first involving a credit union.

"Redlining" is an illegal practice in which lenders avoid providing credit services to individuals living in certain communities or zip codes because of the race, color, or national origin of persons residing there. Under a proposed consent order filed today in federal court in conjunction with a complaint, Citadel has agreed to invest over $6.5 million to increase credit opportunities in neighborhoods of color in the Philadelphia metropolitan area. The proposed consent order also requires Citadel to establish three new branches in Black and Hispanic neighborhoods in Philadelphia over the course of five years.

In its complaint, the United States alleges that from at least 2017 through 2021, Citadel provided mortgage lending services to majority-Black and Hispanic neighborhoods in and around Philadelphia at rates far below that of comparable lenders. During the same time frame, peer lenders generated mortgage applications in predominantly Black and Hispanic neighborhoods at nearly three times the rate of Citadel and originated mortgage loans in those neighborhoods over three times as often.

The United States alleges that Citadel disproportionately focused its outreach, marketing, and home mortgage lending on the predominately White suburbs in the Greater Philadelphia region. All but one of Citadel's full-service branches are in majority-White neighborhoods, and no branches are in Philadelphia, which contains over 75% of the majority-Black and Hispanic neighborhoods and 34% of the total population in Citadel's market area.

Under the proposed consent order, Citadel agrees to invest at least $6 million in a loan subsidy fund to increase access to home mortgage, home improvement, and home refinance loans for residents of majority-Black and Hispanic neighborhoods in Philadelphia. Citadel will spend an additional $250,000 on community partnerships to provide credit, consumer finance, homeownership, and foreclosure prevention services to the residents of these areas, and at least $270,000 on advertising, consumer financial education, and credit counseling. Citadel will also open three new branches in predominantly Black and Hispanic neighborhoods in Philadelphia and will hire a community lending officer to oversee the continued development of lending in communities of color.

According to United States Attorney Jacqueline C. Romero, the proposed resolution presents a tremendous opportunity for long-underserved Philadelphia residents. "For generations, Philadelphia's communities of color have lacked equal access to the credit needed for homeownership. We know that redlining has a devastating impact on a family's finances and future, and results in economic and other inequalities that plague our communities for decades," said Romero. "We also know the transformational change that can occur when credit is made available to underserved residents, and particularly when lenders, like Citadel, establish branch locations in these neighborhoods."

"This redlining settlement marks the Justice Department's very first resolution involving a credit union, making clear our intent to hold all types of lenders accountable for their role in modern-day redlining," said Assistant Attorney General Kristen Clarke of the Justice Department's Civil Rights Division. "There are well over 4,600 credit unions across America, all subject to federal laws that prohibit redlining and lending discrimination. Redlining and other forms of lending discrimination harm communities of color and families by denying them an equal opportunity to access credit, attain the dream of homeownership and build generational wealth. This settlement will expand investment in Black and Hispanic communities, particularly in Philadelphia, and increase opportunities for homeownership and financial stability. Residents of communities harmed by unlawful redlining will finally be able to access credit services from Citadel in their own neighborhoods, including at the new branches required by the settlement."

The settlement is part of the U.S. Attorney General's Combating Redlining Initiative, announced in October 2021 and aimed at coordinating agencies' enforcement efforts to address this persistent form of discrimination. The Initiative expands the Justice Department's reach by strengthening partnerships with U.S. Attorney's Offices and other federal and state agencies across the country. Since 2021, the department has announced 14 redlining resolutions and secured over $144 million in relief for communities of color that have been the victims of lending discrimination across the country.

Assistant U.S. Attorney Bryan C. Hughes, Assistant U.S. Attorney Paul Kaufman (now with the District of New Jersey), Deputy Civil Chief for Civil Rights Lauren DeBruicker, and former Investigator Jeffrey Braun handled this matter for the U.S. Attorney's Office for the Eastern District of Pennsylvania, in collaboration with attorneys from the Justice Department's Civil Rights Division. Citadel cooperated with the Justice Department's investigation and worked with the department to resolve the redlining allegations.

A copy of the complaint and information about the Justice Department's fair lending enforcement work can be found at www.justice.gov/fairhousing. Individuals may report lending discrimination by calling the Justice Department's housing discrimination tip line at 1-833-591-0291 or submitting a report online.

Updated October 10, 2024