The federal government announced Sept. 18 it reached a settlement agreement with OceanFirst Bank to resolve allegations the financial institution engaged in a pattern of lending discrimination through redlining.

Redlining is the illegal practice by which lenders avoiding providing credit services to individuals living in communities of color because of race, color or national origin.

Officials had alleged that from 2018 through at least 2022, Red Bank-headquartered OceanFirst failed to provide mortgage lending services to predominantly Black, Hispanic and Asian neighborhoods in Middlesex, Monmouth and Ocean counties as well as discouraged people seeking credit in those communities from obtaining home loans.

“Specifically, the complaint alleges that 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.”

Under the terms of the agreement, OceanFirst will invest more than $15 million benefitting the involved communities to resolve the claims with the U.S. Attorney’s Office for the District of New Jersey, the Justice Department’s Civil Rights Division and the Department of Housing and Urban Development (HUD).

A proposed consent order will resolve the claims with the Justice Department, subject to court approval. Meanwhile, OceanFirst and HUD have entered into a conciliation agreement with equivalent terms.

Key terms in the OceanFirst agreement include:

• Invest at least $14 million on 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 certain services to residents of those neighborhoods
• 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 trainings on fair lending
• Hire a director of community lending who will oversee the continued development of home mortgage lending in communities of color

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Since launching its Combating Redlining Initiative in 2021, the DOJ has announced 13 redlining resolutions, securing more than $137 million in relief for communities that have been the victims of the lending discrimination.

“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 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 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,” said U.S. Attorney for New Jersey Philip Sellinger. “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.”

Bank cooperating

The government emphasized OceanFirst’s cooperation with the investigation to resolve the allegations.

OceanFirst noted it first established a significant presence outside of Ocean County – and into Central Jersey (Monmouth and Middlesex counties) – in 2018 with the acquisition of Sun National Bank. It highlighted significant commitments in recent years to minority market lending and outreach initiatives. That especially included the New Brunswick area, where the bank’s full-service branch anchors those efforts.

“The commitments we are announcing today are consistent with our Bank’s 122-year history of providing credit and other financial services to all residents of the communities we serve,” said Christopher Maher, chairman and CEO, of OceanFirst, in a statement. “We look forward to continuing the Bank’s efforts in the New Brunswick-Lakewood market to help meet the lending and banking needs of families, businesses, schools and organizations.”