Following a multiyear investigation, New Jersey Attorney General Matthew Platkin alleged in an Oct. 29 report that Republic First Bank engaged in a pattern of mortgage redlining practices against Black, Hispanic and Asian communities in New Jersey.

The allegations mark another unflattering chapter for the now-shuttered Republic First Bank. NJBIZ has reported extensively on the financial institution, from a proxy fight that ultimately ended in the bank failing, its seizure by regulators and then acquisition by Fulton Bank in April.

“The report issued today explains that Republic discriminated based on race and national origin in its residential mortgage lending business,” the New Jersey Attorney General’s Office wrote in its press release. “Mortgage redlining is a form of discrimination prohibited under the LAD (New Jersey Law Against Discrimination). It occurs when, among other things, a lender denies home loans or avoids making home loans in certain neighborhoods based on the race or national origin of the neighborhood’s residents.

“The state’s investigation found that Republic engaged in a pattern and practice of mortgage redlining because it systematically avoided originating home loans in majority-Black, Hispanic, and Asian neighborhoods and failed to originate home loans in those neighborhoods due to its unlawful practices,” the release continued.

“It is shameful that Republic engaged in practices that redlined neighborhoods based on the race or national origin of the neighborhood’s residents,” said Platkin. “Those mortgage redlining practices violate the New Jersey Law Against Discrimination. Since I took office, we have proven our commitment to stopping discriminatory practices in the housing industry. And we will not stand by when anyone violates our law to create barriers to home ownership.”

Peer comparison

The investigation found that between 2018 and 2022, of all the home loans Republic originated, just 6% were to residents of majority-Black, Asian or Hispanic neighborhoods. That’s an especially big contrast versus peers, who were three times more likely to originate loans to residents of these neighborhoods.

Officials pointed to such communities in Burlington, Camden, Gloucester, Atlantic and Cape May counties where Republic allegedly engaged in almost no lending — meanwhile engaging in significant lending in predominantly white neighborhoods nearby.

Because regulators closed Republic, the state Division on Civil Rights (DCR) filed a claim with the Federal Deposit Insurance Corp. (FDIC), the receiver for the failed bank. The pending claim seeks monetary relief for New Jerseyans who these practices harmed.

The FDIC did not immediately respond to a request for comment.

Fulton Bank

“Our investigation of Republic’s practices unfortunately shows that redlining is not merely a thing of the past,” said Sundeep Iyer, director of the Division on Civil Rights. “That’s why we will continue our work to hold accountable those who engage in these egregious and discriminatory practices, and why combating housing discrimination will continue to be a priority for our office.”

In addition to filing that claim with FDIC, the state has shared the investigation findings with Fulton Bank. It also urged the financial institution to take proactive steps to mitigate any potential redlining risks associated with acquiring Republic’s assets.

“The activities cited in the AG’s report occurred prior to the April 26, 2024, acquisition of Republic Bank’s assets, and Fulton Bank was not involved in those activities,” Fulton Bank told NJBIZ in a statement. “At Fulton Bank, we have a long history of supporting all communities including majority minority neighborhoods, and we believe transitioning former Republic assets and team members to our operating model is the best course of action to ensure the American dream is attainable for all customers, in New Jersey and across our five-state footprint.”

New Jersey Citizens Action (NJCA), which has consistently advocated and raised awareness about this issue, applauded the report for shining a light on Republic’s alleged practices.

That latest report comes on the heels of another high-profile redlining case here in New Jersey – resulting in a settlement between OceanFirst Bank and the Justice Department.

‘Not a problem of the past’

“Unfortunately, redlining persists to this day here in New Jersey, as evidenced by the Attorney General’s report on the discriminatory lending practices of Republic First Bank,” said Leila Amirhamzeh, director of community reinvestment for NJCA. “NJCA commends Attorney General Platkin and the NJ Division on Civil Rights for their proactive approach and commitment to fair lending. Redlining is not a problem of the past. Lack of access to fair home mortgage loans and other financial products is a major driver of systemic inequity and only increases New Jersey’s larger than average racial wealth gap.”

She said that as disappointed as the organization is to hear about these practices, NJCA looks forward to the opportunity to work with Fulton Bank.

“Given our history of partnering together to promote affordable homeownership opportunities in low- and moderate-income communities across New Jersey,” said Amirhamzeh. “While Fulton only recently acquired the now-closed Republic’s assets, we are confident we can begin working with them to ensure the needs of New Jersey communities, including those communities harmed by Republic, are being met.”

NJCA closed its statement stressing that this, and other cases, only confirm the need to strengthen Community Reinvestment Act (CRA). The federal fair lending law aims to address the issue of redlining.

“In order to effectively achieve its intent, race and ethnicity must be factored into bank performance evaluations. Currently they are not,” Amirhamzeh said. “It also demonstrates the need for regulators to require banks to enter into community benefits or CRA agreements with community stakeholders and advocates to ensure the needs of all communities are being met.”