Patriot Bank, Redlining, Memphis TN, 2023

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Patriot Bank Accused of Redlining in Memphis

A $1.9 million settlement has been reached with Patriot Bank (Patriot) over allegations that the bank engaged in a pattern of redlining, an illegal practice in which lenders avoid providing credit services to individuals living in, or seeking to live in, communities of color because of the race, color or national origin of the residents in those communities.

According to the Justice Department, from 2015 through at least 2020, Patriot avoided providing mortgage services to majority-Black and Hispanic neighborhoods in Memphis and discouraged people seeking credit in those communities from obtaining home loans. Patriot’s home mortgage lending was focused disproportionately on white areas around the City of Memphis.

Over the same six-year period, other banks received nearly 3.5 times as many loan applications compared to Patriot in majority-Black and Hispanic neighborhoods in Memphis. Even when Patriot generated loan applications from majority-Black and Hispanic areas, the applicants themselves were disproportionately white.

Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division stated, ‘This settlement embodies Dr. Martin Luther King Jr.’s commitment to promoting economic justice and ensuring that Black Americans and all communities of color are able to achieve the American dream, and equally access credit to purchase a home.’

U.S. Attorney Kevin G. Ritz for the Western District of Tennessee added, ‘For too long, practices like redlining and discriminatory lending have been used to undermine the promises of our economic system. Our office is committed to enforcing fair lending laws and ensuring that banks and lenders are providing communities of color equal access to credit and lending opportunities.’

Under the proposed consent order, which is subject to court approval, Patriot will invest $1.9 million to increase credit opportunities for communities of color in Memphis. Specifically, Patriot will invest at least $1.3 million in a loan subsidy fund, spend $375,000 on advertising and outreach, and spend $225,000 on community partnerships.

The department opened its investigation into Patriot’s lending practices after receiving a referral from the bank’s regulator, the Board of Governors of the Federal Reserve System. Patriot cooperated with the department’s investigation and worked with the department to resolve the redlining allegations.