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United States v. First Merchants Bank

United States District Court, S.D. Indiana, Indianapolis Division

August 9, 2019

UNITED STATES OF AMERICA, Plaintiff,
v.
FIRST MERCHANTS BANK, Defendant.

          ORDER

          JAMES PATRICK HANLON UNITED STATES DISTRICT JUDGE

         The United States of America and First Merchants Bank filed a Joint Motion for Entry of Settlement and Agreed Order (the “Settlement Agreement”) for approval and entry by the Court. Finding that the Court has authority to enter the Settlement Agreement and that the Settlement Agreement is lawful, fair, reasonable, and adequate, the motion is GRANTED. Dkt. [2].

         I. Background

         On June 13, 2019, the United States filed a civil complaint alleging that First Merchants Bank violated the Fair Housing Act (“FHA”), 42 U.S.C. §§ 3601-3619, and the Equal Credit Opportunity Act (“ECOA”), 15 U.S.C. §§ 1691-1691f as follows: engaged in unlawful redlining by avoiding providing mortgage credit services to majority-Black areas in Marion County, Indiana between 2011 and 2017; excluded Indianapolis-Marion County and its 50 majority-Black census tracts from the Bank's Community Reinvestment Act assessment area, while including overwhelmingly white counties; failed to have any branch locations in majority-Black areas of Indianapolis-Marion County, refused to market in majority-Black counties, and had a disproportionately low number of loan applications and loan originations from majority-Black neighborhoods compared to its peer institutions. Dkt. 1. First Merchants Bank also had a residential mortgage lending policy that provides a lending preference based on the location of borrowers, not their creditworthiness. Id.

         On the same day the complaint was filed, the parties filed with the Court the Settlement Agreement. Dkt. 2. In the Settlement Agreement, First Merchants Bank does not admit to any of the allegations in the complaint but agrees to:

• take all actions necessary to ensure that it offers and provides all persons with an equal opportunity to apply for and obtain credit (¶ 9)
• retain an independent third-party consultant to assess its fair lending risk management program (¶ 14)
• maintain a fair lending monitoring program (¶ 16)
• provide various training to all employees (¶ 17)
• conduct a community credit needs assessment (¶ 21)
• designate a full-time Director of Community Lending and Development (¶ 24)
• serve a lending area that includes all counties that comprise its current Community Reinvestment Act assessment area that includes all of Indianapolis-Marion County (¶ 25)
• open one new full-service branch located in a majority-Black census tract in Indianapolis-Marion County (¶ 28)
• open one loan production office in Indianapolis-Marion County that is centrally located to multiple majority Black census tracts and accessible to residents of those tracts ...

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