ESSA Bancorp Announces Settlement With DoJ; Co Agrees To Provide $2.9M In Mortgage Loan Subsidies Over A 5-Year Period For Majority Black And Hispanic Census Tracts, $250K In Additional Focused Marketing And Outreach, $125K In Community Development
ESSA Bank & Trust (ESSA), the wholly owned subsidiary of ESSA Bancorp, Inc. (NASDAQ:ESSA), today announced it has entered into a settlement with the U.S. Department of Justice (DOJ) to resolve allegations that it violated fair lending laws in the Philadelphia Metropolitan Statistical Area (MSA).
As noted in the Consent Order resolving the case, ESSA categorically denies violating any fair lending laws or engaging in "redlining."
Under the settlement, ESSA agrees to provide $2.9 million in mortgage loan subsidies over a five-year period for majority Black and Hispanic census tracts, with at least 50% of those subsidies to be invested in specified Philadelphia MSA census tracts in proximity to ESSA's two Delaware County branch locations. The remainder of the subsidies may be used in other qualifying areas.
ESSA is also committing $250,000 in additional focused marketing and outreach, $125,000 in community development partnerships, and making investments in additional mortgage professionals and a community development officer focused on statistically underserved communities.
The settlement includes no civil penalties levied against ESSA.
"This settlement reflects our business decision to avoid the costs, uncertainties, and distractions of litigation," said Gary S. Olson, President and CEO of ESSA.
Olson observed that "during the time period covered by the government's Complaint, ESSA did not receive a single fair lending complaint from any customer or potential customer," noting further that in 2018 (within the time covered by the government's Complaint), ESSA opened a branch and business center in downtown Allentown, Pennsylvania in a majority minority census tract.
"ESSA and its Board of Directors believe this is a constructive resolution to a dispute that has lasted several years," Olson continued. "It is consistent with our guiding principles and longstanding commitment to provide equal lending opportunities to all of the communities we are privileged to serve. We plan on using these loan subsidy funds to expand opportunities for qualified borrowers who can benefit from this assistance. We're happy and pleased to help families purchase homes. It is simply the right thing to do."
ESSA has consistently demonstrated corporate leadership through a diverse, highly qualified and independent Board of Directors. The Bank has long been recognized for its innovation in helping communities and borrowers, such as participating in private/public partnerships like the federal Court-Assisted Re-Entry (CARE) and Philadelphia-based Supervision to Aid Re-Entry (STAR) programs, and Pennsylvania's State Transition Re-Entry Incentive Validating Endeavors (STRIVE) program, which provide loans and financial education to individuals re-entering the community after a period of incarceration.
ESSA also provides housing assistance grants to Houwzer's RiseUp Fund and has supported the Ripple Community Village Adopt-An-Apartment Project in Allentown, among numerous other community activities within its service areas. ESSA assisted more than 700 companies save hundreds of jobs by participating in the Paycheck Protection Plan during the COVID-19 pandemic.
Olson concluded: "We are proud of our record of community service. While vehemently denying the government's allegations of redlining, we have cooperated expeditiously and fully with the investigation into this matter. We look forward to continuing to work closely with the DOJ going forward, and just as importantly, with our communities, to provide lending opportunities for all qualified borrowers, no matter their background, or where they live or work."