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(Reuters) -City National Bank, a unit of Royal Bank of Canada, agreed to commit at least $29.5 million to boost lending to Black and Hispanic home buyers in the Los Angeles area to settle a U.S. government lawsuit accusing it of illegal redlining.
The settlement with the U.S. Department of Justice was disclosed on Thursday in filings with the federal court in Los Angeles.
City National accepted a five-year consent order that also requires the bank, the largest headquartered in Los Angeles, to improve training, advertising, community outreach and financial education, and set up a fair lending oversight committee.
In a civil complaint, the government accused City National of violating the federal Fair Housing Act by having “avoided” providing home loans and other mortgage services in majority-Black and majority-Hispanic neighborhoods between 2017 and 2020.
City National was accused of relying on staff to generate applications largely from its disproportionately white customer base instead of reaching out to Blacks and Hispanics, and ignoring internal reports that suggested shortcomings in its fair lending practices.
The complaint said just 7% of the 6,182 residential mortgage loans that City National made in the area from 2017 to 2020 went to residents of majority-Black and Hispanic census tracts, compared with 44% of loans by its peers.
City National denied wrongdoing in agreeing to settle.
According to the consent order, the bank “maintains that it was in compliance with applicable law at all times, but seeks to resolve this matter in order to avoid prolonged litigation.”
The bank had no immediate comment.
