Redlining in the Memphis Metropolitan Statistical Area (MSA). The government alleged that BancorpSouth, the leading mortgage provider in the MSA, unlawfully redlined with the goal of serving majority-White neighborhoods while avoiding majority-minority neighborhoods. BancorpSouth allegedly engaged in redlining by excluding nearly all majority-minority neighborhoods in the MSA from its Community Reinvestment Act (CRA) assessment area. In particular, BancorpSouth failed to meet the needs of minority communities by encouraging its loan officers to be active in the CRA assessment area as well as only operating retail bank locations and targeting marketing campaigns in the same CRA assessment area. According to the complaint, the lender’s actions resulted in a discriminatory effect that reduced credit availability in majority-minority neighborhoods and discouraged potential minority prospective applicants from seeking loans.

Discriminating in the underwriting of mortgages. BancorpSouth also allegedly discriminated against African-American applicants by consistently rejecting their mortgage applications at higher rates than the applications of similarly-situated White applicants. The complaint referenced an aggregate rejection rate that was 11.9% higher for African-American applicants than for similarly-situated White applicants. The government alleged that this disparity was caused by the wide discretion afforded to BancorpSouth employees in connection with the loan approval process.

Discriminating in the pricing of mortgages. The complaint also alleged that BancorpSouth discriminated against African-American borrowers by charging them higher interest rates than those received by similarly-situated White applicants. The complaint noted that African-American borrowers received loans with interest rates that were 30-64 basis points higher, on average. The government alleged that this disparity was caused by the virtually unlimited discretion afforded to BancorpSouth employees in connection with the loan pricing process.

Implementing discriminatory loan policies. BancorpSouth also allegedly implemented a policy that encouraged employees to deny minority applicants more quickly than similarly-situated White applicants, particularly minority applicants deemed “borderline” under BancorpSouth policies. The government relied upon recordings from internal company meetings to support this allegation.

Remediation Plan. BancorpSouth must engage a compliance-management-systems consultant to review and revise BancorpSouth’s compliance management system in order to avoid discriminatory practices. BancorpSouth also must implement official mortgage pricing policies and procedures. Further, loan officers, branch managers, other relevant managers or senior managers, marketing employees, and the Board of Directors must undergo fair lending training. Finally, BancorpSouth must make efforts to expand its reach by opening branch locations in majority-minority neighborhoods within the MSA.

Monetary Penalties. BancorpSouth must pay the following: