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City National Bank is now offering grants of up to $50,000 in majority-Black or Hispanic census tracts in the metro Los Angeles market as part of a larger initiative to boost lending to underserved communities in several states following a record redlining settlement with federal regulators last year.
In what was touted as the biggest redlining settlement ever reached by the Department of Justice, City National in January 2023 agreed to invest at least $31 million in majority-minority neighborhoods in Los Angeles County.
City National, a subsidiary of Royal Bank of Canada, denied that it had engaged in redlining. But since then, the bank has taken a number of steps to boost mortgage lending to minorities in markets nationwide and revamped its mortgage leadership team.
Last fall, City National began offering “Ladder Up Home Loan Grants” of up to $15,000 for homebuyers in select markets in three states. Homebuyers can use the grants, which don’t have to be paid back, for a down payment, to cover closing costs or to buy down their mortgage rate.
City National has since upped the ceiling on Ladder Up Home Loan Grants in most areas to $20,000, and on Thursday announced it will award Ladder Up Home Loan Grants of up to $50,000 within the Los Angeles-Long Beach-Glendale, Calif., Metropolitan Statistical Area (MSA).
The Ladder Up program, which is not limited to first-time homebuyers, lets borrowers buy a home with as little as 3 percent down without taking on the added burden of mortgage insurance.
David Cameron
“Homeownership strengthens our communities and can help individuals and families ascend the ladder of financial success and generational wealth building,” City National’s David Cameron, head of consumer banking, said in a statement. “We are proud to offer one of the largest grants available to help more people in our community become homeowners.”
In May, City National announced that it had hired mortgage industry veteran Rick Bechtel as head of mortgage and residential lending.
Bechtel, whose previous experience includes serving as head of U.S. residential lending at TD Bank and president of mortgage for real estate brokerage Compass, is based in Los Angeles and reports to Cameron.
“At City National Bank, we know what an important role home ownership plays in building generational wealth,” Cameron said in a statement at the time. “With Rick’s leadership we have an opportunity to further strengthen and expand our mortgage and home equity capabilities and ultimately better serve the home lending needs of our clients and communities.”
Under Bechtel’s leadership, City National has hired Schuyler Vaughan as senior vice president, national mortgage banking; and Cameron Beane as head of mortgage capital and secondary markets.
Rick Bechtel
“The City National Ladder Up Home Loan Grant is a prime example of the sort of innovative thinking that attracted me to the bank,” Bechtel said in an announcement when he was hired. “I have built my career around helping more people achieve the dream of homeownership — it’s extremely rewarding work. I am excited by the opportunity to lead City National’s effort to expand their home lending capabilities to assist our clients, colleagues and communities in achieving their financial goals.”
The Ladder Up Home Loan Grants are provided through special purpose credit programs (SPCPs) City National established last year to serve select markets in Southern California, New Jersey and New York.
Endorsed by federal regulators in 2022, SPCPs help lenders provide financing to borrowers in underserved areas who might otherwise be denied credit or offered less favorable terms.
Other Lenders that offer mortgages through SPCPs include:
- AnnieMac Home Mortgage
- Chase
- CrossCountry Mortgage
- Guaranteed Rate
- Movement Mortgage
- Rocket Mortgage
- TD Bank
- U.S. Bank
- United Wholesale Mortgage
- Wells Fargo
City National was once known primarily as a commercial and small business lender. In the fall of 2022, the bank announced it was launching a new community lending team headed by Vanessa Montañez, a former U.S. Bank home mortgage executive, to “expand mortgage lending to serve historically underserved borrowers through community outreach and financial education.”
Less than two months later — and a day before entering into a consent order with the Department of Justice to settle redlining allegations — City National announced it was expanding its product set and launching SPCPs “for both commercial loans and residential mortgage loans to underserved populations.”
The bank said it would increase resources devoted to residential mortgage lending to serve “the broader needs of its clients and communities in areas that will include California, Georgia, New York, Nevada, Tennessee and Washington, D.C.”
In addition to requiring City National to provide $29.5 million for a loan subsidy fund to provide below-market interest rates, down payment assistance, closing cost assistance, or help with mortgage insurance premiums, the Jan. 12, 2023 consent order committed the bank to open one new branch in a majority-Black and Hispanic neighborhood and conduct a community credit needs assessment for majority-Black and Hispanic census tracts in Los Angeles County.
The Department of Justice’s ongoing Combating Redlining Initiative has resulted in settlements with a dozen lenders totaling more than $122 million to date, including:
- First National Bank of Pennsylvania, which in February agreed to invest at least $11.75 million in a loan subsidy fund to provide better access to mortgages and home improvement loans to residents of majority-Black and Hispanic neighborhoods in the Charlotte and Winston-Salem, North Carolina, markets.
- Jacksonville, Florida-based Ameris Bank, which agreed in October 2023 to a $9 million settlement aimed at improving access to credit in majority-Black and Hispanic neighborhoods.
- Newark, Ohio-based Park National Bank, which agreed in February 2023 to invest at least $7.75 million in a loan subsidy fund to increase access to credit in majority-Black and Hispanic neighborhoods in the Columbus area.
- Lakeland Bank, which agreed in September 2022 to invest at least $12 million in a loan subsidy fund for residents of Black and Hispanic neighborhoods in the Newark, New Jersey, metropolitan area, including neighborhoods in Essex, Somerset and Union counties.
- Berkshire Hathaway-owned Trident Mortgage Company, which agreed in July 2022 to invest more than $20 million to create homeownership opportunities in communities of color around Philadelphia.
In announcing the settlement with Ameris Bank last fall, Attorney General Merrick Garland said the Justice Department had over two dozen ongoing investigations into redlining across the country.
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