Now-closed Republic bank engaged in mortgage redlining in South Jersey, a N.J. Attorney General investigation found
Republic did hardly any mortgage lending in communities that are majority Black, Hispanic, or Asian in N.J., but it did “significant lending” in majority-white neighborhoods, the AG's office said.
Philadelphia-based Republic First Bank, doing business as Republic, systematically avoided lending to homebuyers in communities that are majority Black, Hispanic, or Asian in New Jersey, according to a multiyear investigation by the state’s Office of the Attorney General.
In a report published Tuesday, the office said that between 2018 and 2022, Republic did hardly any mortgage lending in these neighborhoods across Burlington, Camden, Gloucester, Atlantic, and Cape May Counties, but it did “significant lending” in majority-white neighborhoods nearby.
It’s a form of mortgage redlining when lenders avoid making home loans or deny mortgage applicants in certain neighborhoods based on the race or ethnicity of residents. The Attorney General’s Office said its investigation found that Republic knew about its disparities in lending “but repeatedly failed to take corrective action.” And those disparities increased between 2018 and 2022, the office said.
Attorney General Matthew J. Platkin called Republic’s practices “shameful.”
Republic was the largest commercial bank based in Philadelphia when the Pennsylvania Department of Banking and Securities closed it in April for being “unsafe and unsound.”
Following the mortgage redlining investigation, the New Jersey Office of the Attorney General filed a claim with the Federal Deposit Insurance Corp. (FDIC), which became Republic’s receiver after the bank closure. The state is asking the FDIC for money for New Jersey residents it says were harmed by Republic’s practices.
» READ MORE: How $1 billion vanished in Republic Bank collapse
Fulton Bank, based in Lancaster, assumed Republic’s loan portfolio, including its residential mortgages. The Office of the Attorney General said it has shared the findings of its investigation with Fulton and “urged Fulton to take proactive steps to mitigate any potential redlining risks associated with its acquisition of Republic’s assets.”
In a statement, Fulton said, “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.”
The Attorney General’s Office said it will be monitoring Fulton’s mortgage lending performance.
“Homeownership is one of the most critical ways that New Jerseyans build wealth,” Sundeep Iyer, director of the Attorney General’s Office’s Division on Civil Rights, said in a statement. “But decades of mortgage redlining and discrimination have denied communities of color an equal chance to build wealth through homeownership.
“Our investigation of Republic’s practices unfortunately shows that redlining is not merely a thing of the past. 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.”
Between 2018 and 2022, 6% of the mortgages Republic originated went to residents of neighborhoods that were majority Black, Asian, or Hispanic, the investigation found. Lenders of similar size were more than three times as likely to originate mortgages in these neighborhoods and more likely to lend to Black, Asian, and Hispanic homebuyers.
The investigation found that Republic made exceptions to its lending criteria for white and high-income applicants for mortgages while making those exceptions at “significantly lower” rates for Black, Asian, and Hispanic applicants.
And the investigation found that Republic concentrated storefront bank branches in majority-white neighborhoods and did not have any of these branches or mortgage offices in any neighborhoods that had a majority of Black, Hispanic, or Asian residents. And Republic did not meaningfully advertise in neighborhoods of color, the Attorney General’s Office said.
Earlier this month, the U.S. Department of Justice announced a settlement of a discrimination complaint against one of Pennsylvania’s largest credit unions over mortgage lending. Citadel Federal Credit Union, based in Exton, agreed to add branches in Philadelphia and lend more to the city’s Black and Hispanic homebuyers.