OceanFirst Bank To Pay For Discriminating Against Middlesex Clients

MIDDLESEX COUNTY, NJ — Ocean County-based OceanFirst Bank has agreed to pay more than $15 million to resolve allegations that it engaged in lending discrimination in Middlesex, Ocean, and Monmouth counties known as redlining, the U.S. Attorney’s Office announced Wednesday.

Redlining is where lenders discourage loan applications, deny equal access to home loans and other credit services, or avoid providing home loans and other credit services to neighborhoods based on the race, color, or national origin of the residents of those neighborhoods.

Federal authorities have looked at the practices of lenders across the country, focused on the years from 2018 through 2022, as part of the Justice Department’s Combatting Redlining Initiative, a coordinated enforcement effort to address this persistent form of discrimination against communities of color, the U.S. Attorney’s Office said.

“Redlining creates an unequal playing field that unfairly prevents many persons of color from achieving the American dream of home ownership, and this type of systemic and intentional discrimination cannot and will not be tolerated,” U.S. Attorney Philip R. Sellinger said.

“It is wholly unacceptable that redlining persists into the 21st century, and we are committed to ensuring that all of our citizens have the chance to put down roots in their own home as this helps build stronger communities for all of us. This agreement is a major step forward in removing illegal and discriminatory barriers in residential mortgage lending in New Jersey.”

During the years examined, OceanFirst avoided providing home loans and other mortgage services in majority-Black, Hispanic, and Asian neighborhoods in Middlesex, Monmouth and Ocean counties.

“OceanFirst thereby discriminated against applicants and prospective applicants living in, or seeking credit to purchase properties in, majority-Black, Hispanic, and Asian neighborhoods” in the three counties, authorities said.

“OceanFirst also engaged in acts or practices directed applicants and prospective applicants that discouraged those living in, or seeking credit to purchase properties in, these neighborhoods from seeking or applying for credit from OceanFirst.”

Specifically, authorities said OceanFirst disproportionately focused its outreach and advertising on majority-white communities, placed its branches in majority-white neighborhoods, and closed its only branches in the majority-Black, Hispanic, and Asian neighborhoods in those counties.

According to the complaint, before OceanFirst acquired Sun National, they had a single branch in Middlesex County, located close to the Monmouth County border in a majority-white census tract.

On January 31, 2018, OceanFirst acquired Sun National’s two branches and one loan production office in Middlesex County. Two of those acquired locations were in majority-Black, Hispanic, and Asian neighborhoods, according to the complaint.

The Bank closed two of those locations, including one in a majority-Black, Hispanic, and Asian census tract, by the end of 2018. It closed another branch in a majority-Black, Hispanic, and Asian neighborhood in 2019 and the final Middlesex branch in 2021.

"But instead of applying its expertise to invest in its Middlesex County locations, OceanFirst did not serve those customers, including those in majority-Black, Hispanic, and Asian neighborhoods, and resumed its focus on Monmouth County and Ocean County where nearly all census tracts are majority white," the complaint said.

OceanFirst agreed to the following under the consent order:

• Invest at least $14 million in a loan subsidy fund to increase access to home mortgage, home improvement, and home refinance loans for residents of majority-Black, Hispanic, and Asian neighborhoods in Middlesex, Monmouth, and Ocean counties;
• Spend $400,000 on community partnerships to provide services related to credit, consumer financial education, homeownership, and foreclosure prevention for residents of predominantly Black, Hispanic, and Asian neighborhoods in those counties;
• Spend $700,000 on advertising, outreach, consumer financial education, and credit counseling focused on predominantly Black, Hispanic, and Asian neighborhoods in those counties;
• Open a loan production office and maintain the bank’s recently opened full-service branch, both located in predominantly Black, Hispanic, and Asian neighborhoods in those counties, with at least one mortgage loan officer assigned to each location;
• Conduct a community credit needs assessment, evaluate its fair lending compliance management systems, and conduct staff training on fair lending; and
• Hire a director of community lending who will oversee the continued development of home mortgage lending in communities of color.

The U.S. Attorney’s Office and the Justice Department’s Civil Rights Division opened their investigation into OceanFirst’s lending practices after receiving a referral from the bank’s regulator, the Office of the Comptroller of the Currency (OCC). OceanFirst cooperated with this investigation and worked with the Department of Justice and HUD to resolve the redlining allegations.

“This settlement, and the over $137 million in relief the Justice Department has secured for communities across the country, will help to ensure that future generations of Americans inherit a legacy of home ownership that they have been too often denied,” said Attorney General Merrick B. Garland.

“Redlining is unlawful, it is harmful, and it is wrong. The Justice Department will continue to hold banks and mortgage companies accountable for redlining and to secure relief for the communities that continue to be harmed by these discriminatory practices.”

“Redlining is not only illegal, but it unfairly closes doors of economic opportunity for thousands of families of color in this country,” said HUD Acting Secretary Adrianne Todman. “Together with our partners at the Justice Department, HUD remains committed to enforcing the Fair Housing Act by rooting out all forms of discrimination in housing. Today’s announcement underscores our shared commitment to achieving justice and creating equitable opportunities for Americans, particularly those who have historically been denied access.”