Lawsuit alleges former National Bank went online against Black Indy residents

Indiana-based Old National Bank has been accused in a federal lawsuit of redlining in the Indianapolis area by providing a disproportionate number of mortgages to black borrowers, closing branches in predominantly black neighborhoods and giving black people less information during the mortgage application process.

The Fair Housing Center of Central Indiana, or FHCCI, filed the lawsuit Thursday after a multi-year investigation into the financial institution and a meeting with bank officials. According to the complaint, officials in private meetings did not deny allegations of discriminatory lending practices.

“Old National structured its business to avoid providing access to mortgage credit to black residents and neighborhoods in the Indianapolis area and to discourage black residents from applying for mortgage credit,” the FHCCI states in its lawsuit. “Old National deliberately seeks to limit its residential lending activities to predominantly white areas and customers and maintains policies and practices that have the effect of doing so.”

Describing the bank’s conduct as redlining, the FHCCI says Evansville-based Old National violates federal fair housing law.

the complaint was filed Thursday in U.S. District Court for the Southern District of Indiana.

“During the period under review, Old National Bank was one of the worst performers in providing mortgages to black people looking for homes in central Indiana,” said Amy Nelson. , executive director of FHCCI, in a press release. “Old National’s peer lenders have done a much better job of meeting the credit needs of Black residents.”

Old National is the largest Indiana-based bank, with over $23 billion in assets. The financial institution rebuffed FHCCI’s allegations.

“Old National strongly and categorically denies assertions by the Fair Housing Center of Central Indiana regarding some of our lending practices,” the bank said in a written statement. “Old National is committed to fair and equitable lending practices. Because this is now the subject of ongoing litigation, we are unable to comment further at this time.

The complaint comes as Indiana Bank is prepares to acquire First Midwest Bancorp, based in Chicago. Saying merger would significantly expand Old National’s footprint and put even more communities at risk of redlining, FHCCI calls on Federal Reserve to do due diligence to ensure fair lending concerns are addressed before the merger. approved.

In its lawsuit, the FHCCI gives a detailed analysis of Old National’s loan practices in the Indianapolis-Carmel-Anderson Metropolitan Statistical Area.

The geographic area is home to 2 million people, 305,000 of whom are black. Most black residents, 260,000, live in Marion County. In the two-year period from 2019 to 2020, Old National approved more than 2,250 mortgages across the region, but only 37 went to black borrowers.

In Marion County, 3.86% of Old National mortgages went to black customers. Comparatively, 14.73% of Marion County peer institution mortgages for the same two years went to Black residents.

FHCCI argues that if Old National’s inability to lend to black borrowers was due to a lack of qualified borrowers, other Indianapolis MSA lenders would have similarly low levels of minority lending.

“Old National’s product line and the far greater success of its peers in lending to black customers makes it clear that the reason for defendant’s abysmal lending record is its deliberate avoidance of black borrowers and neighborhoods, that is to say, a red line,” said the FHCCI in its complaint. .

Additionally, the FHCCI points out that Old National closed four branches in Indianapolis that were in census tracts with at least 25% black people. Additionally, its four mortgage loan officers are located in an office on East 96and Street, away from neighborhoods where more black residents live.

The FHCCI conducted two “matched pairs” tests in 2021, passing white and black individuals as Indianapolis residents looking for a mortgage. The results, says the FHCCI, further confirmed the bank’s “model and practice of redlining”.

According to the complaint, Old National loan officers provided black testers with less information, took them less seriously, and directed one of the testers to more expensive mortgage products. Conversely, loan officers gave white testers more useful and detailed product comparisons and analysis of their finances, additional information about loan options, and more meaningful follow-up contacts.

FHCCI is asking the Southern Indiana District Court to issue a permanent injunction to stop Old National from continuing to discriminate in mortgage lending. The nonprofit also wants the court to order the financial institution to take steps to remedy the effects of the redlining.

The law firm RileyCate LLC in Fishers represents FHCCI.

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