City National Bank to Pay $31 Million to Settle Racial Bias Lawsuit in Home Mortgage Lending

City National Bank to Pay $31 Million to Settle Racial Bias Lawsuit

City National Bank has agreed to pay $31 million to settle a U.S. Justice Department lawsuit alleging racial bias in its home mortgage lending in Los Angeles County. The government’s complaint, filed in Los Angeles, accused the bank of violating federal housing and banking discrimination laws by avoiding loans to buyers of homes in neighborhoods that are majority Black or Latino.

The largest bank headquartered in L.A., City National Bank has faced scrutiny for its lack of branches in predominantly Black or Latino neighborhoods. The government found that from 2017 to 2020, the bank maintained just three of its 37 branches in these areas, while other banks in the county received more than six times as many loan applications in Black and Latino neighborhoods.

The bank relied on “relationship managers” to generate home loan applications from existing customers, who were predominantly white, according to the government. Despite denying breaking discrimination laws, City National Bank agreed to settle the case to avoid prolonged litigation.

Under the proposed settlement, the bank will provide $29.5 million in home loan subsidies to borrowers in Black and Latino areas, including interest-rate cuts and down-payment assistance. Additionally, City National Bank will spend $500,000 on advertising targeting residents of these neighborhoods and $500,000 on a consumer financial education program to enhance their access to credit.

At a press conference announcing the agreement, Assistant Atty. Gen. Kristen Clarke emphasized the importance of equal access to loans regardless of race. City National Bank released a statement expressing its commitment to ensuring all consumers have an equal opportunity to apply for and obtain credit.

As part of the settlement, City National Bank also plans to open a new branch in a majority Black or Latino neighborhood and ensure that at least four loan officers are dedicated to serving those areas. The bank’s efforts come as part of a broader initiative by Atty. Gen. Merrick Garland to step up enforcement of housing discrimination laws, which has already yielded $75 million in relief to borrowers in several cities, including Los Angeles.