Microsoft Word - Response Discrimination Compliant against Colonial Savings

Improving Lives, One Community at a Time

October 25, 2022

Colonial Savings, FA

2626 West Freeway

Fort Worth, TX 76102

Office of the Comptroller of the Currency

Fort Worth Field Office

9003 Airport Freeway Suite 275,

North Richland Hills, TX 76180-9127

RE: Discrimination Complaint against Colonial Savings

Dear OCC,

The undersigned community organization is submitting this letter in response to the letter dated

10/7/2022 received from Colonial Savings. Colonial Savings declined the meeting request made on

10/17/2022 from the community to learn more about the bank’s goals and priorities. Also, they were

not willing to discuss the community needs in Dallas and Fort Worth. Colonial Savings does not want to

discuss potential solutions.

The Home Mortgage Disclosure Act (HMDA) requires Colonial Savings to maintain, report, and publicly

disclose loan-level information about mortgages. The HDMA data indicates that Colonial Savings is not

serving the housing needs of Hispanic and African American communities. HMDA was originally enacted

by Congress in 1975 and is implemented by Regulation C.

Colonial Savings failed to provide any lending data and/or a detailed explanation as it relates to

discrimination complaint in the DFW MSA.

As mentioned in the letter dated 10/01/2022, Colonial Savings is not meeting the needs the needs of our

community, which specifically includes low- and moderate-income neighbor located in Southern Dallas

and Fort Worth. Colonial Savings fails to provide small business and/or consumer lending services in

Southern Dallas and Fort Worth’s majority African American communities.

Southern Dallas Zip Codes (LMI/High Minority Areas)

75116, 75134, 75203, 75207, 75208, 75210, 75211, 75212, 75215, 75216, 75217, 75223, 75224, 75226,

75227, 75228, 75232, 75233, 75236, 75237, 75241, 75249, 75253

Fort Worth Zip Codes (LMI/High Minority Areas)

76107 (MSA-State-County-Tract: 23104-48-439-1025.00)

76103, 76105, 76112, 76119

Concerns:

 Colonial Savings does not have a branch located in a low-income census tract in the DFW MSA.

 Colonial Savings does not have a branch located in a high minority/high poverty

census tract in

the DFW MSA.

 Colonial Savings does not originate any commercial loans in low-income census tracts in the

DFW MSA.

 Colonial Savings does not originate any commercial loans in high minority/ high poverty

census

tracts in the DFW MSA.

 Colonial Savings does not originate any small business loans to businesses with less than a

million dollar in revenue that was in low-income census tracts in the DFW MSA.

 Colonial Savings does not originate small business loans to businesses with less than a million

dollar in revenue that was in high minority/ high poverty census tracts in the DFW MSA.

 Colonial Savings does not offer any solutions for the 163,000 unbanked/underbanked residents

in the DFW MSA

The Dallas–Fort Worth–Arlington metropolitan statistical area's population was 7,573,136 according to

the U.S. Census Bureau's 2019 population estimates, making it the most populous metropolitan area in

both Texas and the Southern United States, the fourth largest in the U.S., and the tenth largest in the

Americas. The Dallas–Fort Worth metroplex has over one million African-American and the second-

largest metro population of African-Americans in Texas.

Colonial Savings engages in unlawful discrimination by acting to meet the credit needs of majority-

White neighborhoods in the Dallas-Fort Worth Metropolitan Statistical Area ("DFW MSA" or "MSA")

while avoiding the credit needs of majority-minority neighborhoods.

In addition, Colonial Savings engages in lending discrimination by “redlining” predominantly African

American and Hispanic neighborhoods in Southern Dallas & Fort Worth. “Redlining” is a term describing

an illegal practice in which lenders intentionally avoid providing services to individuals living in

predominantly minority neighborhoods because of the race of the residents in those neighborhoods.

High Minority/High Poverty=Racially or Ethnically Concentrated Areas of Poverty (R/ECAPs) https://hudgis-

hud.opendata.arcgis.com/datasets/56de4edea8264fe5a344da9811ef5d6e_0

Dallas is a majority minority city (66.1 percent of population) with 41.8 percent of residents identifying as

Hispanic and 24.3 percent identifying as Black.

Dallas is a city with a population of just under 1,344,000, including 24.3 percent African American

residents, 41.8 percent Hispanic/Latinx residents, and 3.4 percent Asian residents; and 30.5 White (Non-

Hispanic)

Fort Worth is a majority-minority city (60.6 percent of the population) with 36.1 percent of residents

identifying as Hispanic and 17.7 percent identifying as Black.

Fort Worth is a city with a population of just under 1,000,000.

Equal Credit Opportunity Act (ECOA) and Fair Housing Act (FHA) (Colonial Savings failed to dispute any

of the factual information outlined below)

Colonial Savings violates Equal Credit Opportunity Act (ECOA) and the Fair Housing Act (FHA) by

discriminating against African Americans and other minority consumers. The Equal Credit Opportunity

Act (ECOA) prohibits lenders from discriminating based on race and other characteristics.

In terms of the discrimination, we assert that Colonial Savings does engage in the following:

 All Colonial Savings branches are located in white-majority neighborhoods, compared to

having none in majority-minority neighborhoods

 Made no efforts to market to African Americans and/or Hispanics in Southern Dallas &

Fort Worth

 Does not specifically target any marketing toward Hispanic and/or African Americans in

the DFW MSA and specifically Southern Dallas & Fort Worth

 Does not employ an African American and/or Hispanics commercial loan officers in the

DFW MSA

Regulation B, the ECOA’s implementing regulation, provides that a creditor shall not make any oral or

written statement, in advertising or otherwise, to applicants or prospective applicants that would

discourage on a prohibited basis a reasonable person from making or pursuing an application. But the

ECOA itself does not set forth such a prohibition.

Fair Lending Concerns (Colonial Savings failed to acknowledge any of the factual information outlined

below)

I worked with the National Community Reinvestment Coalition (NCRC) to analyze the small business

lending of Colonial Savings in the DFW MSA. This is what NCRC found.

DOJ Redlining Cases/ Few or no branches; https://www.fhcci.org/wp-content/uploads/2013/08/Jonathan-Bont-

Redlining.pdf

 According to the Home Mortgage Disclosure Act (HMDA) data from 2018 to 2019, Colonial

Savings Bank made a total of 180 in DFW MSA. This data demonstrated that in 2019, 31.67%

(57) of all home loans in Dallas went to minorities however only 6.66% (12) of Colonial Savings

Bank ’s home loans were extended to Blacks (African Americans).

o Made a smaller percentage of HMDA-reportable residential mortgage loans in majority-

Black and Hispanic neighborhoods compared to its peers in the DFW MSA

 According to the Home Mortgage Disclosure Act (HMDA) data from 2019 to 2020, Colonial

Savings Bank made a total of 1,410 in the DFW MSA. This data demonstrated that in 2020,

24.68% (348) of all home loans in Dallas went to minorities however only 6.38% (90) of Colonial

Savings Bank ’s home loans were extended to Blacks (African Americans).

o Made a smaller percentage of HMDA-reportable residential mortgage loans in majority-

Black and Hispanic neighborhoods compared to its peers in the DFW MSA

 Small Business Lending (Colonial Savings failed to acknowledge any of the information outlined

below)

o Received almost no applications from applicants for properties located in African

American and Hispanic Low to Moderate Income neighborhoods in the DFW MSA

o Colonial Savings does not originate any commercial loans in low-income census tracts in

the DFW MSA.

o Colonial Savings does not originate any commercial loans in high minority/ high poverty

census tracts in the DFW MSA.

o Colonial Savings does not originate any small business loans to businesses with less than

a million dollar in revenue that was in low-income census tracts in the DFW MSA.

o Colonial Savings does not originate small business loans to businesses with less than a

million dollar in revenue that was in high minority/ high poverty census tracts in the

DFW MSA.

Products available for the Underserved/Minority Communities (Colonial Savings failed to dispute any

of the factual information outlined below)

Access to affordable credit is a key component of an individual’s ability to cultivate a strong financial

position and participate fully in the DFW economy. The Equal Credit Opportunity Act of 1974 was passed

to protect all consumers, yet the effects of the discrimination endure today.

Colonial Savings does not offer any solutions for the 163,000 unbanked/underbanked residents in the

DFW MSA.

 https://household-survey.fdic.gov/place-

data?type=msa&area=Dallas_Fort_Worth_Arlington_TX

o The underbanked/unbanked information is available on the FDIC website.

 https://www.aba.com/about-us/press-room/press-releases/aba-urges-americas-banks-to-offer-

bank-on-certified-accounts

Colonial Savings does not have any special-purpose credit programs to address their disparities in small

business lending in underserved high minority communities in Southern Dallas & Fort Worth.

 https://www.consumerfinance.gov/about-us/newsroom/consumer-financial-protection-bureau-

issues-advisory-opinion-to-help-expand-fair-equitable-and-nondiscriminatory-access-to-credit/

 https://www.hud.gov/sites/dfiles/GC/documents/Special_Purpose_Credit_Program_OGC_guida

nce_12-6-2021.pdf

 12 CFR § 202.8 - Special purpose credit programs.

o https://www.ffiec.gov/PDF/fairlend.pdf

Community Development Lending

Colonial Savings failed to provide the number of loans made in Low to Moderate Income census tracts

versus Middle to Upper Income census tracts. This information will confirm the lending disparity in the

DFW MSA.

Small Business/Commercial Lending

Colonial Savings failed to provide the number of loans made in Low to Moderate Income census tracts

versus Middle to Upper Income census tracts. This information will confirm the lending disparity in the

DFW MSA.

Project REACH Dallas

Colonial Savings does not participate in Project REACh (Roundtable for Economic Access and Change).

Southern Dallas Progress is a member of Project REACh.

www.occ.gov/news-issuances/news-releases/2022/nr-occ-2022-30.html

Lack of Staff and Board Diversity (Colonial Savings failed to dispute any of the factual information

outlined below)

Colonial Savings does not have any African Americans and/or Hispanics on the Board of Directors.

Colonial Savings does not have any Commercial Loans Officers in the DFW MSA that are African

Americans and/or Hispanics.

Colonial Savings does not have any Mortgage Loans Officers in the DFW MSA that are African Americans

and/or Hispanics.

Colonial Savings does not participate in the Dodd-Frank Act Section 342(b)(2)(C) Diversity self-

assessment.

The DFW MSA is majority minority.

Colonial Savings is not a member of any of the Minority Trade Organizations below:

https://regionalhca.org/

https://www.namcdfw.org/

https://blackcontractors.org/

https://aacatx.com/

Colonial Savings is not a member of any of the Minority Real Estate Trade Organizations below:

https://www.narebdallas.org/

http://nahrepdallas.org/

https://www.varep.net/index.php/dallas-chapter

https://narebnorthtexas.org/nareb-north-texas

https://wcdallas.com/

https://realestatealliance.org/

https://www.areaa.org/dfw

Colonial Savings is not a member of any of the Minority Chambers below:

https://dallasblackchamber.org/

https://arlingtonblackchamber.org/

https://fwmbcc.org/

https://www.gdhcc.com/

Discrimination Cases/DOJ Redlining Cases

Justice Department Secures Agreement with Lakeland Bank to Address Discriminatory Redlining

https://www.justice.gov/opa/pr/justice-department-secures-agreement-lakeland-bank-address-

discriminatory-redlining

Justice Department and Consumer Financial Protection Bureau Secure Agreement with Trident Mortgage

Company to Resolve Lending Discrimination Claims

https://www.justice.gov/opa/pr/justice-department-and-consumer-financial-protection-bureau-secure-

agreement-trident-mortgage

DOJ, CFPB and OCC Announce Resolution of Lending Discrimination Claims Against Trustmark National

Bank

https://www.justice.gov/opa/pr/justice-department-announces-new-initiative-combat-redlining

Justice Department and Office of the Comptroller of the Currency Announce Actions to Resolve Lending

Discrimination Claims Against Cadence Bank

https://www.justice.gov/opa/pr/justice-department-and-office-comptroller-currency-announce-actions-

resolve-lending

CFPB Files First Ever Redlining Complaint Against a Non-Bank Mortgage Lender

https://www.consumerfinancemonitor.com/2020/07/20/cfpb-files-first-ever-redlining-complaint-

against-a-non-bank-mortgage-lender/

Regulation B prohibits discouragement of “applicants or prospective applicants”. Specifically, it states: “A

creditor shall not make any oral or written statement, in advertising or otherwise, to applicants or

prospective applicants that would discourage on a prohibited basis a reasonable person from making or

pursuing an application.” The Official Interpretations of Regulation B also explain that this prohibition

“covers acts or practices directed at prospective applicants that could discourage a reasonable person,

on a prohibited basis, from applying for credit.”

https://files.consumerfinance.gov/f/documents/cfpb_supervisory-highlights_issue-24_2021-06.pdf

Conclusion

The CRA regulation is very clear — a finding that a bank failed to comply with laws on fair and

responsible lending trumps otherwise satisfactory or even outstanding CRA performance. The CRA

regulations specifically state that a rating will be "adversely affected by evidence of discriminatory or

other illegal credit practices," including but not limited to violations of the Equal Credit Opportunity Act,

the Fair Housing Act, the Home Ownership and Equity Protection Act, the Federal Trade Commission

Act, the Real Estate Settlement Procedures Act and the Truth in Lending Act.

On behalf of the Southern Dallas & Fort Worth Community, we ask that you refer this discriminatory

case to the U.S. Department of Justice (DOJ) and the Consumer Financial Protection Bureau (CFPB).

Sincerely,

James McGee

President/Chair

JMcGee@SouthernDallasProgress.com

Southern Dallas Progress Community Development Corporation