Case: 1:16-cv-01172-TSB Doc #: 1 Filed: 12/28/16 Page: 1 of 15 PAGEID #: 1 IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF OHIO WESTERN DIVISION UNITED STATES OF AMERICA, ) ) Plaintiff, ) CIVIL ACTION NO. 1:16CV1172 ) v. ) ) UNION SAVINGS BANK, and ) GUARDIAN SAVINGS BANK, FSB, ) ) Defendants. ) ____________________________________) COMPLAINT INTRODUCTION 1. The United States brings this action against Union Savings Bank (“Union”) and Guardian Savings Bank (“Guardian”) under the Fair Housing Act (“FHA”), 42 U.S.C. §§ 3601- 3619 and the Equal Credit Opportunity Act (“ECOA”), 15 U.S.C. §§ 1691-1691f, for engaging in a pattern or practice of unlawful redlining by structuring its business so as to avoid the credit needs of majority-black neighborhoods in its residential mortgage lending from at least 2010 through 2014, and thereby engaging in acts or practices directed at prospective applicants that discouraged applicants in these neighborhoods from applying for credit. 2. The FHA and the ECOA prohibit creditors from discriminating on the basis of, among other characteristics, race and color in their residential mortgage lending practices. The FHA makes it unlawful for any bank to discriminate against any person in making available residential mortgage loans on the basis of, among other characteristics, race and color. 42 U.S.C. §§ 3604(a)-(b), 3605(a). The ECOA makes it illegal for a creditor to discriminate against an
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Complaint United states v. Union Savings Bank and guardian ...
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applicant in any aspect of a credit transaction on the basis of, among other characteristics, race
and color. 15 U.S.C. § 1691(a); 12 C.F.R. § 1002.4(a). The ECOA also prohibits any statements,
acts, or practices that would or could discourage on a prohibited basis a prospective applicant
from applying for credit. 15 U.S.C. § 1691(a); 12 C.F.R. § 1002.4(b); 12 C.F.R. pt. 1002, Supp.
I, ¶ 1002.4(b)(1).
3. In March 2015, the United States opened an investigation into whether Union had
engaged in unlawful redlining.
4. Union and Guardian (collectively the “Banks” or “defendants”) engaged in
unlawful redlining throughout their main lending areas by discouraging applicants in majority-
black neighborhoods1 in at least four Metropolitan Statistical Areas (“MSAs”): Cincinnati, Ohio;
Dayton, Ohio; Columbus, Ohio, and Indianapolis, Indiana. Union and Guardian both generate
the vast majority of their mortgage loan applications for properties within these four MSAs.2 In
2014, for example, Union drew over 90 percent of its mortgage loan applications for properties
within these four MSAs, with 35 percent from the Cincinnati MSA, 17 percent from the Dayton
MSA, 22 percent from the Columbus MSA, and 17 percent from the Indianapolis MSA. In
2014, for example, Guardian drew 80 percent of its mortgage loan applicants for properties
within the Cincinnati MSA.
5. Union’s and Guardian’s policies and practices that discouraged consumers in
majority-black census tracts from applying for credit from Union or Guardian include but are not
necessarily limited to: locating their branches to avoid serving majority-black neighborhoods;
1 A “majority-black neighborhood” is a census tract in which more than 50% of the residents are identified in the U.S. Census as “Black or African American.”
2 “Mortgage loan applications” include all applications that Union and Guardian were required to report under the Home Mortgage Disclosure Act, 12 U.S.C. §§ 2801-2810.
18. Union and Guardian engaged in unlawful redlining by structuring their businesses
so as to avoid majority-black neighborhoods within the Cincinnati, Dayton, Columbus, and
Indianapolis MSAs from at least 2010-2014, and thereby engaged in acts or practices directed at
prospective applicants that discouraged applicants in these majority-black neighborhoods from
applying for credit, as described in the following paragraphs.
19. Based on 2010 Census data, the total population and racial makeup of the four
MSAs in which Union and Guardian conduct the vast majority of their lending are as follows:
MSA Total Population % Non-Hispanic White % Black
Cincinnati 2,130,151 82% 13%
Columbus 1,836,536 76% 16%
Dayton 841,502 79% 16%
Indianapolis 1,756,241 75% 16%
20. Each of these MSAs contains areas with highly concentrated black populations.
Based on 2010 Census data and a measure called the dissimilarity index,3 Cincinnati was the
eighth most highly segregated between black and non-Hispanic white residents of the nation’s
102 metropolitan areas with populations above 500,000. Based on the same measure, Dayton
was the 14th most highly segregated, Indianapolis was the 15th most highly segregated, and
Columbus was the 33rd most highly segregated.
3 Residential segregation can be measured by several indices; the most-widely used measure is called the dissimilarity index. Dissimilarity, which ranges from 0 (complete integration) to 1 (complete segregation), measures the percentage of a group’s population that would have to change residences for each neighborhood to have the same percent of that group as the metropolitan area overall.
outer-suburbs. See Exhibit C. Union has one branch in the Indianapolis MSA, which, at its
closest point, is located approximately four miles north of the closest of that city’s majority-
black census tracts. See Exhibit D.
25. Since 1994, Guardian has opened or relocated six full-service branches in
majority-white census tracts in the Cincinnati MSA and none in majority-black census tracts in
that MSA. At present, all of Guardian’s branches are located in majority-white census tracts.
See Map attached as Exhibits E. All but one of Guardian’s full-service branches form a circle
surrounding, yet far from, the center of the majority-black portions of the Cincinnati MSA. See
id.
Applications and Originations from Majority-Black Neighborhoods
26. Union and Guardian are required to delineate assessment areas for federal
regulators to use in evaluating whether they are “meet[ing] the credit needs of [their]
community” pursuant to the Community Reinvestment Act (“CRA”). 12 C.F.R. § 345.41(a); 12
C.F.R. § 25.41(a). Union maintains assessment areas within the Cincinnati, Dayton, Columbus,
and Indianapolis MSAs, and Guardian maintains an assessment area within the Cincinnati
MSA.4
27. Statistical analyses of both Union’s and Guardian’s mortgage loan applications
and originations for each year from 2010 to 2014, and for the five years combined, show that
Union and Guardian served the credit needs of the residents of majority-white census tracts in
4 Union’s assessment area within the Cincinnati MSA is comprised of Butler, Clermont, Hamilton and Warren Counties (“Union’s Cincinnati AA”). Union’s assessment area within the Dayton MSA is comprised of Greene, Miami and Montgomery Counties (“Dayton AA”). Union’s assessment area in the Columbus MSA is comprised of Delaware, Fairfield and Franklin Counties (“Columbus AA”). Union’s assessment area in the Indianapolis MSA is comprised of Hamilton and Marion Counties (“Indianapolis AA”). Guardian’s assessment area within the Cincinnati MSA is comprised of Butler, Clermont, Hamilton Counties in Ohio, as well as Boone, Campbell and Kenton Counties in Kentucky (“Guardian’s Cincinnati AA”).
The United States further prays for such additional relief as the interests of justice may
require.
Dated: This 28th day of December, 2016.
Respectfully submitted,
For the United States:
BENJAMIN C. GLASSMAN United States Attorney
/s/ Matthew J. Horwitz_____ Matthew J. Horwitz (0082381) Assistant U.S. Attorney United States Attorney’s Office Southern District of Ohio 221 East Fourth Street, Suite 400 Cincinnati, Ohio 45205 Tel: (513) 684-3711 [email protected]
LORETTA E. LYNCH Attorney General
/s/ Vanita Gupta________________ VANITA GUPTA Principal Deputy Assistant Attorney General Civil Rights Division
/s/ Sameena Shina Majeed________ SAMEENA SHINA MAJEED Chief, Housing and Civil Enforcement Section Civil Rights Division
/s/ Sara L. Niles_________________ DANIEL A. MOSTELLER Acting Special Litigation Counsel SARA L. NILES Trial Attorney United States Department of Justice Civil Rights Division Housing and Civil Enforcement Section 950 Pennsylvania Avenue, N.W.- NWB Washington, DC 20530 Tel.: (202) 514-2168 Fax: (202) 514-1116 [email protected]
County Boundaries Prepared by:Percent Black NH Population by 2010 Tract U.S. Department of JusticeCivil Rights Division BLACKNHP Washington, D.C. 20530
<=25% Date: 11/28/2016 >25% and <=50%>50% and <=75%