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The U.S. Department of Justice will coordinate with financial regulators and state attorneys general on a new initiative to enforce laws that prevent discriminatory practices involving “modern-day redlining.”

Citing the growing racial wealth gap and claims that redlining remains pervasive nation-wide, the federal Department of Justice is launching what it called its “most aggressive and coordinated enforcement effort” to tackle the problem.

Redlining is prohibited by the Fair Housing Act and the Equal Credit Opportunity Act. The DOJ defines redlining as the practice of avoiding providing services to individuals living in communities of color because of the race or national origin of the communities’ residents.

“Lending discrimination runs counter to fundamental promises of our economic system,” Attorney General Merrick B. Garland said in Friday’s statement. “When people are denied credit simply because of their race or national origin, their ability to share in our nation’s prosperity is all but eliminated. Today, we are committing ourselves to addressing modern-day redlining by making far more robust use of our fair lending authorities. We will spare no resource to ensure that federal fair lending laws are vigorously enforced and that financial institutions provide equal opportunity for every American to obtain credit.”

The initiative will be led by the housing and civil enforcement section of DOJ’s civil rights division. Assistant Attorney General Kristen Clarke for the Justice Department’s civil rights division said in Friday’s statement that enforcement of fair lending laws would ensure that banks and lenders provide communities of color with equal access to lending opportunities.

“Equal and fair access to mortgage lending opportunities is the cornerstone on which families and communities can build wealth in our country,” Clarke said. “We know well that redlining is not a problem from a bygone era but a practice that remains pervasive in the lending industry today. Our new initiative should send a strong message to banks and lenders that we will hold them accountable as we work to combat discriminatory race and national origin-based lending practices.”

The DOJ said homeownership remains the principal way to build wealth, noting that the lack of investment in and access to mortgage lending services for communities of color has contributed to families of color having lower homeownership rates and net worth compared to white families. The DOJ added that the gap in homeownership rates between white and Black families has increased since 1960, before the Fair Housing Act of 1968.

The initiative will involve:

• Using U.S. attorneys’ offices “as force multipliers to ensure that fair lending enforcement is informed by local expertise on housing markets and the credit needs of local communities of color.”
• Expanding the department’s analysis of potential redlining to both depository and non-depository institutions.
• Strengthening partnerships with financial regulatory agencies to ensure fair lending violations are identified and referred to the DOJ.
• Increasing coordination with state attorneys generals on potential fair lending violations.

The DOJ also on Friday announced an agreement to resolve redlining allegations with Mississippi-based Trustmark National Bank.

The DOJ, the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency worked together on an investigation into Trustmark for engaging in lending discrimination by redlining predominantly Black and Hispanic neighborhoods in Memphis, Tennessee, the statement said. The settlement includes a $5 million penalty and $3.85 million to increase access to mortgages in Memphis neighborhoods affected by the redlining.