OceanFirst Bank reached a $15 million settlement with the U.S. Department of Justice over claims that the company "redlined" Black, Hispanic, and Asian neighborhoods in three New Jersey counties by discouraging minority residents from seeking home loans.

The DOJ's complaint, filed Thursday in the U.S. District Court for the District of New Jersey, alleged that from 2018 through 2022, OceanFirst disproportionately focused its advertising on "majority-white" neighborhoods while it closed branches in majority-Black, Asian, and Hispanic towns in Middlesex, Monmouth, and Ocean counties. The allegations accused the bank of the discriminatory practice of "redlining," where credit services are denied to individuals living in communities of color because of the race, color, or national origin of residents in violation of the Fair Housing and the Equal Credit Opportunity Acts. The case is captioned U.S. v. Oceanfirst Bank. 

The complaint alleged that in New Brunswick, OceanFirst generated disproportionately low numbers of loan applications and home loans from majority-Black, Hispanic, and Asian neighborhoods compared to similarly situated lenders.

"Redlining is unlawful, it is harmful, and it is wrong," U.S. Attorney General Merrick B. Garland said in a press release. "The Justice Department will continue to hold banks and mortgage companies accountable for redlining and to secure relief for the communities that continue to be harmed by these discriminatory practices."

The investigation, conducted by the Justice Department's Civil Rights Division and the U.S. Attorney's Office for the District of New Jersey, began with a referral from OceanFirst's regulator, the Office of the Comptroller of the Currency. According to a press release, the bank cooperated with the investigation and worked with both the DOJ and the U.S. Office of Housing and Urban Development to resolve the claims.

The settlement was reached on the same day the complaint was filed through a proposed consent order subject to court approval.

OceanFirst agreed to fund a loan subsidy to increase access to home mortgage, improvement, and refinance loans for Middlesex, Monmouth, and Ocean County residents in majority-Black, Hispanic, and Asian neighborhoods. The bank will also spend $400,000 on community partnerships to provide credit-related services, consumer financial education, homeownership, and foreclosure prevention in those counties. Another $700,000 will go toward advertising, outreach, consumer financial education, and credit counseling.

OceanFirst also agreed to open a loan production office and maintain a recently opened full-service branch in predominantly ethnic neighborhoods. A director of community lending will oversee the continued development of home mortgage lending for the bank in communities of color.

"We are committed to ensuring that everyone in New Jersey has access to the American dream of homeownership, regardless of race, color, or national origin," said U.S. Attorney for the District of New Jersey Philip R. Sellinger. "This agreement is an important step in leveling the playing field and removing illegal and discriminatory barriers in residential mortgage lending."

In a press release on the settlement, OceanFirst explained that after operating exclusively in Ocean County for eight decades, the company began expanding in 2015 to include parts of Southern New Jersey and Pennsylvania. When the bank acquired Sun National Bank in 2018, it expanded into Middlesex and Monmouth counties for the first time. The mortgage opportunities in New Brunswick were initially limited, according to the statement.

"The commitments we are announcing today are consistent with our bank's 122-year history of providing credit and other financial services to all residents of the communities we serve," said Christopher D. Maher, Chairman and CEO of OceanFirst. "We look forward to continuing the bank's efforts in the New Brunswick-Lakewood market to help meet the lending and banking needs of families, businesses, schools and organizations."

OceanFirst was represented in the matter by Andrea K. Mitchell and Christopher T. Napier of Mitchell Sandler in Washington, D.C. Mitchell declined to comment on the settlement.