Trustmark Pays $5M To Settle Federal Charges Of Discrimination In Mortgage Lending

Trustmark National Bank, a subsidiary of Trustmark Corp. TRMK, has agreed to a $5 million settlement with three federal regulatory agencies — the Consumer Financial Protection Bureau (CFPB), the Department of Justice (DOJ) and the Office of the Comptroller of the Currency (OCC) — that will resolve charges the bank discriminated in its mortgage lending within majority-Black and Hispanic neighborhoods in the Memphis metropolitan area.

What Happened: Trustmark is a national bank headquartered in Jackson, Mississippi, with 196 branches in five southern states. It operates 22 branches in the Memphis metropolitan area.

The charges against Trustmark matter arose from an OCC examination that identified potential redlining, which resulted in investigations by the CFPB and DOJ discovering the bank mostly avoided locating branches in Memphis’ majority-Black and Hispanic communities, refused to assign loan officers to these communities, failed to monitor its fair lending compliance and actively discouraged residents within the communities from seeking mortgage loans.

Trustmark's actions were alleged to have occurred between 2014 and 2018.

The regulators stated that Trustmark violated the Fair Housing Act; the Equal Credit Opportunity Act and its implementing regulation, Regulation B; and the Consumer Financial Protection Act of 2010.

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What Happened Next: Trustmark agreed to pay a civil money penalty totaling $5 million, of which $4 million will satisfy the OCC’s civil money penalty order and the remaining $1 million will be paid to the CFPB. Trustmark was also told to invest $3.85 million over five years in a loan subsidy fund to increase mortgage lending opportunities to Memphis residents in majority Black and Hispanic census tracts while allocating $200,000 annually over five years to advertising, community outreach and credit and financial education services.

An additional $400,000 will be spent by Trustmark over the next five years for its community development partnerships to support services related to credit, financial education, homeownership and foreclosure prevention that benefit residents in the Memphis communities where the complaints originated, and it will open a mortgage loan production office within a majority-Black and Hispanic neighborhood in Memphis.

Duane A. Dewey, Trustmark’s president and CEO, said the bank agreed to the settlement “to avoid the distraction of protracted litigation and because we share the common goals of breaking down barriers to home financing and exploring innovative ways to help residents of underserved areas achieve the dream of homeownership.”

Photo: Toml1959 / Flickr Creative Commons.