City National Bank to Fund $29.5M in Home Loan Subsidies After DOJ Redlining Settlement

The U.S. Department of Justice announced on January 12, 2023 that City National Bank, Los Angeles's largest privately owned bank, had agreed to pay more than $31 million to resolve allegations that it engaged in a pattern or practice of lending discrimination by redlining majority-Black and Hispanic neighborhoods in Los Angeles County. It is the largest redlining settlement in the department's history.

What the Settlement Covers

Federal investigators alleged that from 2017 through at least 2020, City National avoided providing mortgage services to majority-Black and Hispanic neighborhoods in Los Angeles County and discouraged people living in those neighborhoods from applying for home loans. According to the DOJ, other banks operating in the same areas received roughly six times as many mortgage applications as City National did.

Under the consent order filed in the U.S. District Court for the Central District of California, City National agreed to:

• Invest at least $29.5 million in a loan subsidy fund to increase credit for home mortgage, home improvement, and home refinance loans for residents of majority-Black and Hispanic neighborhoods in Los Angeles County.
• Spend at least $750,000 on advertising, outreach, consumer financial education, and credit repair initiatives in those neighborhoods.
• Spend at least $500,000 on partnerships with community-based organizations that provide services related to credit, financial education, homeownership, and foreclosure prevention.
• Open a new branch in a majority-Black and Hispanic neighborhood in Los Angeles County and dedicate at least four mortgage loan officers to soliciting applications there.
• Employ a full-time Community Lending Manager to oversee the continued development of lending in communities of color.

What It Means for Homebuyers

The $29.5 million loan subsidy fund is the core consumer benefit of the settlement. It is designed to help qualifying homebuyers in majority-Black and Hispanic neighborhoods of Los Angeles County access mortgage, home improvement, and refinance loans on more favorable terms — typically through below-market interest rates, reduced down payments, or closing-cost assistance delivered through City National's lending programs.

Residents of affected neighborhoods who are considering a home purchase, refinance, or home improvement loan can contact City National Bank directly to ask about loan products funded through the settlement, or work with HUD-approved housing counseling agencies in Los Angeles County for help navigating the application process.

Background on the Case

Redlining is an illegal practice in which lenders avoid providing services to individuals living in communities of color because of the race or national origin of the people who live in those neighborhoods. The case against City National Bank was part of the Justice Department's Combating Redlining Initiative, launched in October 2021. In a statement, the bank said it disagreed with the allegations but agreed to the settlement to avoid prolonged litigation and to support fair lending.

Always confirm current eligibility rules and loan terms directly with City National Bank or a HUD-approved housing counselor before applying.