10-29-2024 2:40pm

Attorney General Report Finds Republic First Bank Engaged in Mortgage Redlining Practices

State investigation reveals discrimination against Black, Hispanic, and Asian communities, seeks FDIC compensation for affected New Jersey residents.

NEW JERSEY - New Jersey Attorney General Matthew J. Platkin and the Division on Civil Rights (DCR) released a detailed report today, documenting findings from a multi-year investigation into mortgage redlining by Republic First Bank, which allegedly avoided lending to Black, Hispanic, and Asian communities in violation of the New Jersey Law Against Discrimination (LAD). With the bank's closure in April 2024, the DCR has filed a claim with the Federal Deposit Insurance Corporation (FDIC) seeking financial relief for affected New Jerseyans.

The report indicates Republic First Bank, operating as Republic, systematically avoided mortgage origination in communities of color, disproportionately impacting prospective homeowners in predominantly Black, Hispanic, and Asian neighborhoods across New Jersey. As outlined in the investigation, Republic failed to meet mortgage needs for these communities, directing lending instead to predominantly white neighborhoods. Between 2018 and 2022, Republic originated only 6 percent of its home loans in majority-Black, Hispanic, or Asian neighborhoods, a rate far below peer banks, which were over three times as likely to serve these areas.

“It is shameful that Republic engaged in practices that redlined neighborhoods based on the race or national origin of the neighborhood’s residents. Those mortgage redlining practices violate the New Jersey Law Against Discrimination,” said Attorney General Platkin.

The report describes various discriminatory practices that Republic reportedly employed, such as:

Failing to locate any of its 20 branches or mortgage offices within majority-Black, Hispanic, or Asian neighborhoods, instead concentrating branches in white communities.
Avoiding advertising in communities of color, limiting mortgage opportunities in these areas.
Failing to address its internal acknowledgment of redlining risks, despite worsening disparities from 2018 to 2022.
Making frequent exceptions to underwriting policies for white and higher-income borrowers but restricting these exceptions for Black, Hispanic, and Asian applicants.

As part of the claim filed with the FDIC, the state is pursuing monetary compensation for the damage done to New Jersey residents by these alleged discriminatory lending practices. The FDIC, now managing Republic’s assets following its closure by the Pennsylvania Department of Banking and Securities, is tasked with processing these claims. In the meantime, Fulton Bank, N.A., which acquired Republic's loan portfolio, has been notified of the findings, with DCR recommending proactive measures to mitigate redlining risks within the newly acquired assets.

The investigation showed that Republic’s lending to Black borrowers was 1.5 times lower than its peers, 2.5 times lower for Asian borrowers, and over three times lower for Hispanic borrowers, underscoring a significant disparity. The report also notes Republic’s minimal lending in majority-Black, Hispanic, and Asian neighborhoods in Burlington, Camden, Gloucester, Atlantic, and Cape May counties, where it prioritized lending in nearby white communities.

“Homeownership is one of the most critical ways that New Jerseyans build wealth. But decades of mortgage redlining and discrimination have denied communities of color an equal chance to build wealth through homeownership,” said Sundeep Iyer, Director of the Division on Civil Rights. “Our investigation of Republic’s practices unfortunately shows that redlining is not merely a thing of the past.”

Deputy Attorneys General Surinder Aggarwal, Mia Dohrmann, and Loren Miller led the DCR’s representation under Assistant Attorney General Mayur Saxena and Section Chief Nancy Trasande. DCR’s investigation was conducted by Deputy Associate Director Iris Bromberg and Associate Director Malcolm Peyton-Cook.

The Attorney General’s office confirmed it will closely monitor Fulton Bank’s lending patterns in New Jersey’s communities of color to prevent further redlining and ensure compliance with fair lending practices in future mortgage activity.