Question: A community group recently accused my bank of redlining because we weren’t advertising mortgage loans in the African American community. We don’t have any branches in the neighborhoods the community group wants us to advertise in – does Indiana law require us to advertise in a market where we don’t have a branch presence?

Answer: Depending on the proximity of your bank to the neighborhoods in question, and the extent to which you are engaged in mortgage lending activity in the market regardless of branch presence, yes. If the neighborhoods at issue are within your reasonably expected market area – which generally means the same CRA Assessment area or metropolitan statistical area (MSA) – you may be inadvertently violating not only federal fair lending laws but also the Indiana Fair Housing Act.¹

The purpose of the IFHA is to:

1. provide for fair housing practices in Indiana;
2. create a procedure for investigating and settling complaints of discriminatory housing practices; and
3. provide rights and remedies substantially equivalent to those granted under federal law.

Compliance with the IFHA is overseen by the Indiana Civil Rights Commission. The IFHA provides that a person whose business includes engaging in residential real estate related transactions may not discriminate against a person in making a real estate related transaction available or in the terms or conditions of a real estate related transaction because of race, color, religion, sex, disability, familial status or national origin.²

It is a common misconception that banks only need to incorporate fair lending practices in the loan application and approval process. In fact, fair lending considerations should be taken into account long before the loan application process begins. Considering fair lending issues in the product development and marketing process is equally important, and distribution of marketing materials should extend to all parts of your existing market regardless of whether you have a physical branch presence. Without incorporating fair lending considerations at this early stage of the product development and deployment process, you may inadvertently expose your bank to allegations of redlining.

In addition to penalties under the various federal fair lending laws, the IFHA provides the Indiana Civil Rights Commission authority to investigate alleged discriminatory housing practices. The ICRC may order a civil penalty of up to $10,000 per offense for a first offense and up to $50,000 for subsequent offenses if prior offenses have occurred within the past seven years. Alternatively, the IFHA permits an aggrieved party to bring a civil action for fair lending violations in which they may seek actual and punitive damages, attorney’s fees, court costs and injunctive relief.³

There are several helpful resources available to assist in fair lending compliance, including the FFIEC 2009 Interagency Fair Lending Examination Procedures.⁴ Fair lending issues have been a significant focus throughout the Biden-Harris administration, and in addition to the prudential banking regulators, the Department of Housing and Urban Development and the U.S. Department of Justice have become increasingly aggressive in their enforcement activities.