DOJ asks to terminate NJ bank’s redlining order early

The Department of Justice, which recently terminated one Biden-era fair lending consent order, is now pushing to free another bank from its obligations under a three-year-old redlining settlement.

The DOJ filed an unopposed motion last week asking a federal judge to dismiss the department’s consent order with New Jersey-based Lakeland Bank more than two years before it’s slated to end.

Lakeland — which was acquired last year by Provident Financial Services — was hit by the Justice Department in 2022 with one of the costliest redlining settlements in the agency’s history. The DOJ alleged that the bank failed to provide mortgage lending services to Black and Hispanic neighborhoods in the Newark, New Jersey, area between 2015 and 2021.

The bank agreed at the time to invest $12 million in a loan subsidy for residents of previously excluded neighborhoods over a five-year period. Lakeland also said it would spend more than $1 million on outreach, consumer education and community partnerships. The consent order is currently scheduled to be in effect until at least September 2027.

The DOJ argued in its motion last week that Lakeland “has demonstrated a commitment to remediation and has reached substantial compliance with the monetary and injunctive terms” of the order. Lakeland, which is now part of Provident, has also committed to continuing the disbursement of the loan subsidy fund, according to the government’s filing. 

Keith Buscio, director of public relations for Provident, affirmed that commitment Monday in an email to American Banker.

“Provident acknowledges the benefit of the mortgage loan subsidy to underserved communities and, in the event the DOJ’s motion is granted, will commit to spending the remaining amount under the subsidy,” Buscio wrote.

Provident, which announced its plan to buy Lakeland in 2022, one day before the consent order was made public, closed the acquisition in May 2024. The deal was originally expected to close in the second quarter of 2023, but was later extended to allow more time for regulatory approvals.

Ultimately, in reviewing the merger application, the Federal Reserve determined that the consent order was binding and that Lakeland had made progress toward satisfying its obligations. It also determined that Provident had appropriate control in place to make sure that Lakeland’s commitments were met.

On Monday, in response to the possibility of Lakeland exiting the consent order early, several fair housing advocacy groups sought to intervene, arguing that the DOJ hasn’t presented adequate evidence to dismiss the case.

The New Jersey Citizen Action Education Fund, the Housing Equality Center of Pennsylvania and the National Fair Housing Alliance wrote in their brief that terminating the agreement requires “‘exceptional circumstances,’ none of which have been presented to this court.”

“This Court should therefore hold the parties to the terms of the Consent Order to which they voluntarily agreed, require Lakeland to fully remedy the harm its practices allegedly caused, and allow the Newark community to continue to reap the benefit of Lakeland’s obligations under the Consent Order for the remainder of its agreed upon duration,” the groups wrote.

In a statement to American Banker, New Jersey Citizen Action said it “condemned” the Trump administration’s motion to terminate the consent order with Lakeland. 

“This funding and these programs are critical to remediate the impact of redlining,” Leila Amirhamzeh, New Jersey Citizen Action director of community reinvestment, said in the statement. She added that “the Trump administration’s efforts to terminate the order sends a clear message to financial institutions that it will not hold banks accountable for discriminatory redlining practices.”

Days before the DOJ filed the proposal to terminate the Lakeland consent order, two of the department’s New Jersey-based attorneys — Michael Campion and Susan Millensky — requested to withdraw from the case. A spokesperson for the U.S Attorney’s Office in New Jersey could not immediately be reached for comment.

Last month, the DOJ and the Consumer Financial Protection Bureau requested the dismissal of a 2021 consent order against Trustmark National Bank. That case also involved lending discrimination charges, and Jackson, Mississippi-based Trustmark agreed to pay a $5 million civil money penalty.

The DOJ’s request in the Trustmark case was approved by a federal judge last month.

During the Biden administration, the DOJ brought 15 redlining settlements against banks in three years as part of an initiative combating the unfair lending practices.

The Trump administration has taken a sharply different position on lending discrimination. On April 23, President Trump signed an executive order revoking the use of what’s known as “disparate-impact liability,” arguing that the legal theory results in unlawful discrimination.

The order calls for the administration to “assess all pending investigations, lawsuits and consent judgement that rely on a theory of disparate-impact liability and take appropriate action,” and it requires agencies to “deprioritize enforcement of all statutes and regulations to the extent they include disparate-impact liability.”