PHILADELPHIA (KYW Newsradio) — A local bank has agreed to pay $3 million to resolve lending discrimination allegations in Philadelphia’s Black and Hispanic neighborhoods.
According to a federal complaint filed by the U.S. Department of Justice’s Civil Rights Division and the U.S. Attorney’s Office for the Eastern District of Pennsylvania, ESSA Bank & Trust engaged in redlining from at least 2017 to 2021 by failing to provide mortgage loans to majority-Black and Hispanic neighborhoods.
The complaint also alleges that the bank inadequately staffed loan officers to cover the branches in those neighborhoods, and primarily targeted majority-white areas while avoiding Philadelphia County for advertising.
Historically redlined areas of Philadelphia still experience disproportionate amounts of poverty, poor health outcomes, unemployment and violent crime compared to other neighborhoods, according to a report from the city.
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While ESSA denies violating any lending laws or engaging in redlining, the bank has agreed to pay a $3 million settlement.
Under the settlement, ESSA will invest the funds to increase mortgage loan subsidies and other credit opportunities in majority-Black and Hispanic neighborhoods of their lending area, including its Upper Darby and Lansdowne branches.
In all, ESSA has 20 branches throughout eastern Pennsylvania.
ESSA President Gary Olson said the settlement reflects the bank’s business decision to avoid the costs and distractions of litigation. He said the company did not receive any complaints from customers or potential customers during the time period covered in the federal complaint.
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