Claim Filed With FDIC Seeking Recovery for Harm to New Jerseyans Caused by Now-Closed Bank

TRENTON – Attorney General Matthew J. Platkin and the Division on Civil Rights (DCR) today issued a report outlining the findings of a multi-year investigation into allegations of unlawful mortgage redlining and discrimination by Republic First Bank. The investigation – initiated by DCR and the Division of Law (DOL) – found that Republic First Bank, doing business as Republic, engaged in a pattern and practice of redlining Black, Hispanic, and Asian communities in New Jersey in violation of the New Jersey Law Against Discrimination (LAD).

Because regulators closed Republic in April 2024, DCR has filed a claim with the Federal Deposit Insurance Corporation (FDIC), which is the receiver for the failed bank, and is seeking recovery from the FDIC for New Jerseyans harmed by Republic’s redlining practices.

The report issued today explains that Republic discriminated based on race and national origin in its residential mortgage lending business. Mortgage redlining is a form of discrimination prohibited under the LAD. It occurs when, among other things, a lender denies home loans or avoids making home loans in certain neighborhoods based on the race or national origin of the neighborhood’s residents. The State’s investigation found that Republic engaged in a pattern and practice of mortgage redlining because it systematically avoided originating home loans in majority-Black, Hispanic, and Asian neighborhoods and failed to originate home loans in those neighborhoods due to its unlawful practices.

As the report explains, the State’s investigation found that Republic knew about the bank’s underperformance in generating mortgage applications from, and originating loans to, people of color, but repeatedly failed to take corrective action to address these severe disparities. In fact, between 2018 and 2022, those disparities worsened, and Republic continued to generate few applications from, and originate few loans to, people of color.

“It is shameful that Republic engaged in practices that redlined neighborhoods based on the race or national origin of the neighborhood’s residents. Those mortgage redlining practices violate the New Jersey Law Against Discrimination,” said Attorney General Platkin. “Since I took office, we have proven our commitment to stopping discriminatory practices in the housing industry. And we will not stand by when anyone violates our law to create barriers to home ownership.”

“Homeownership is one of the most critical ways that New Jerseyans build wealth. But decades of mortgage redlining and discrimination have denied communities of color an equal chance to build wealth through homeownership,” said Sundeep Iyer, Director of the Division on Civil Rights. “Our investigation of Republic’s practices unfortunately shows that redlining is not merely a thing of the past. That’s why we will continue our work to hold accountable those who engage in these egregious and discriminatory practices, and why combating housing discrimination will continue to be a priority for our office.”

Republic First Bank was a depository bank insured by the FDIC. It entered into the residential mortgage lending business in 2016 and continued to originate residential loans until 2023. In 2024, however, the Pennsylvania Department of Banking and Securities closed Republic in order to protect depositors, citing the Bank’s “unsafe and unsound condition.” The FDIC was then appointed the receiver of the failed bank. The FDIC subsequently entered into an agreement with Fulton Bank, N.A., under which Fulton assumed Republic’s loan portfolio, including its residential mortgage portfolio. The FDIC, meanwhile, continues to act as the receiver for Republic, and is processing claims by creditors against Republic.

Based on the findings set forth in the report published today, the State has filed a claim with the FDIC. The State’s claim seeks monetary relief for New Jerseyans who were harmed by Republic’s unlawful mortgage redlining practices between 2018 and 2022. That claim is currently pending before the FDIC.

The report published today explains that Republic originated disproportionately few loans to borrowers of color in New Jersey. As the report notes, between 2018 and 2022, just 6 percent of Republic’s home loans were originated to residents of majority-Black, Asian, or Hispanic neighborhoods. By contrast, Republic’s peer lenders – that is, lenders of similar size to Republic – were more than three times as likely to originate loans to residents of these neighborhoods.  Meanwhile, Republic engaged in almost no lending in majority-Black, Hispanic, and Asian neighborhoods in Burlington, Camden, Gloucester, Atlantic, and Cape May Counties, even as it engaged in significant lending in predominantly white neighborhoods nearby.

The report also notes that Republic’s peers originated loans to Black borrowers at over 1.5 times the rate Republic did, to Asian borrowers at about 2.5 times the rate Republic did, and to Hispanic borrowers at over 3 times the rate Republic did.

The State’s investigation revealed that Republic’s significant underperformance in lending to communities of color was driven by several unlawful mortgage redlining practices, including:

• Failing to take meaningful or adequate corrective action to address its failure to lend to communities of color, even though the State found that Republic knew of significant redlining risks in its lending;
• Concentrating its storefront bank branches and mortgage offices in predominantly white areas, and failing to locate even a single one of its 20 storefront bank branches or mortgage offices in a majority-Black, Hispanic, or Asian neighborhood;
• Failing to conduct meaningful advertising in neighborhoods of color; and
• Repeatedly making exceptions to underwriting policies for white and high-income borrowers who sought home loans from Republic, while its rate of such exceptions to Black, Hispanic, and Asian applicants is significantly lower.

In addition to filing a claim with FDIC, DCR has shared the findings from its investigation with Fulton Bank. The State urged Fulton to take proactive steps to mitigate any potential redlining risks associated with its acquisition of Republic’s assets. At this time, Fulton has not identified additional steps it plans to take to address or mitigate any redlining risks stemming from its acquisition of Republic’s assets. The State will monitor Fulton’s mortgage loan performance to ensure that Republic’s prior redlining practices do not continue to harm Black, Asian, and Hispanic neighborhoods in New Jersey.

DCR is represented in this matter by Deputy Attorneys General Surinder Aggarwal, Mia Dohrmann, and Loren Miller, under the supervision of Assistant Attorney General Mayur Saxena and Section Chief Nancy Trasande. The investigation was handled within DCR by Deputy Associate Director Iris Bromberg and Associate Director Malcolm Peyton-Cook.

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The New Jersey Division on Civil Rights (DCR) works to prevent, eliminate, and remedy discrimination and bias-based harassment in employment, housing, and places of public accommodation throughout New Jersey. DCR enforces the Law Against Discrimination, the New Jersey Family Leave Act, and the Fair Chance in Housing Act.

To find out more information or to file a complaint, go to www.njcivilrights.gov.

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