Justice Department Reaches Agreement with ESSA Bank & Trust to Resolve Philadelphia-Area Lending Discrimination Allegations

PHILADELPHIA – United States Attorney Jacqueline C. Romero announced that the U.S. Department of Justice’s Civil Rights Division and the U.S. Attorney’s Office for the Eastern District of Pennsylvania filed a proposed consent order today to resolve allegations that Stroudsburg, Pennsylvania-based ESSA Bank & Trust (ESSA) engaged in a pattern or practice of lending discrimination by “redlining” majority-Black and Hispanic neighborhoods around Philadelphia. 

“Redlining” is an illegal practice in which lenders avoid providing credit services to individuals living in communities of color because of the race, color, or national origin of residents there. The Fair Housing Act (FHA) and the Equal Credit Opportunity Act (ECOA) prohibit financial institutions from discriminating on such bases when providing mortgage lending services. 

The Department began investigating ESSA’s lending practices after receiving a Federal Deposit Insurance Corporation (FDIC) referral. ESSA fully cooperated with the investigation.

The consent order is subject to court approval and was filed, together with the United States’ complaint, in the U.S. District Court for the Eastern District of Pennsylvania. The complaint alleges that:

• From at least 2017 to 2021, and in violation of the FHA and ECOA, ESSA failed to provide mortgage lending services to (and did not serve the credit needs of) majority-Black and Hispanic neighborhoods in and around Philadelphia;

• ESSA inadequately staffed loan officers to cover the Bank’s branches in such neighborhoods; and

• ESSA’s residential lending advertising targeted majority-white areas while avoiding Philadelphia County.  

ESSA worked expeditiously with the Department to resolve these allegations. Under the consent order, ESSA agrees to invest over $3 million to increase credit opportunities in majority-Black and Hispanic neighborhoods in the Bank’s lending area—including within a five-mile radius around ESSA’s Upper Darby and Lansdowne branches, which encompasses West Philadelphia and the City’s Grays Ferry section. Specifically, ESSA will invest in and for residents of those neighborhoods at least:

• $2.92 million in a loan subsidy fund to increase access to home mortgage, home improvement, home refinance, and home equity loans and lines of credit;

• $125,000 on community partnerships to provide services that increase residential mortgage credit access within a five-mile radius of the Upper Darby and Lansdowne branches; and

• $250,000 on advertising, outreach, consumer financial education, and credit counseling to expand the Bank’s services within that radius.

ESSA also agrees: to assess and report on its fair lending program; to train staff on the Bank’s obligations under the consent order; to complete a community credit needs assessment and remedial plan; to maintain a Fair Lending Committee and a Community Development Officer; and to hire two new mortgage loan officers to serve its Upper Darby and Lansdowne branches.

Announced in October 2021, the Department of Justice’s Combatting Redlining Initiative coordinates the efforts of the FDIC and other enforcement agencies to address this persistent form of discrimination. To date, under the Initiative, the Department has announced seven redlining cases and settlements, and secured $87 million in relief for communities of color that have been victims of lending discrimination. This includes last year’s $20 million settlement with Trident Mortgage Company of its alleged redlining in the Philadelphia metropolitan area.

"Accessing the American dream of owning your own home is possible only when there is equality for all in their opportunities to access lending in the residential mortgage markets," said U.S. Attorney Romero. “Redlining in Greater Philadelphia has deep roots; it's led to decades of disinvestment in communities of color. We appreciate ESSA's prompt cooperation with the Department's investigation and their efforts that will aim to infuse lending resources and help build wealth in neighborhoods of color." 

“For too long, residents of communities of color have been unlawfully denied equal access to credit and shut out of economic opportunities,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “When banks engage in redlining, they perpetuate existing patterns of segregation and widen the racial wealth gap in our country. This resolution makes clear our commitment to holding banks and financial institutions accountable for modern-day redlining while ensuring access to fair lending in communities of color.”

The matter is being handled in the Department’s Civil Rights Division by Special Counsel for Fair Lending Varda Hussain and Trial Attorney Audrey Yap, both of the Housing and Civil Enforcement Section, and in the United States Attorney’s Office by Assistant United States Attorney Gerald B. Sullivan.

A copy of the complaint and information about the Department’s fair lending enforcement can be found at www.justice.gov/fairhousing. Individuals may report lending discrimination by calling the Department’s Housing Discrimination Tip Line at 1-833-591-0291, or submitting a report online.

Citizens in the Eastern District of Pennsylvania who believe that they may have been victims of lending discrimination may also contact the U.S. Attorney’s Office for the Eastern District of Pennsylvania at 215-861-8200 or via email at USAPAE.CivilRights@usdoj.gov.