Following
Of course, it should be noted that lenders who made riskier loans prior to 2008 would probably have suffered greater losses and thus become much more conservative in terms of lending criteria. Such across-the-board changes would not necessarily be illegal but would nonetheless result in a dramatic shift in lending patterns. In the Evans Bank case, however, the state has pointed to the location of branches, distribution of marketing materials, and comparative application data of competitors as evidence of a conscious decision to avoid lending in certain areas.
Branch locations and changes in lending criteria that result in fewer applications and approved loans in certain areas differ from redlining where a lender — in response to such data — makes demonstrable good faith efforts to originate loans in diverse areas. For instance, in the Evans Bank case, if the bank engaged in marketing efforts specifically targeting the alleged redlining zones, it either would likely prevented the statistical imbalance or otherwise provided the bank with strong evidence demonstrating there was no conscious intent to ostracize the impacted areas. While the Evans Bank case is in its infancy and thus the bank has not had a chance to provide its side of the story, the case illustrates the need to carefully analyze all facets of operations as lenders are often in a "damned if you do and damned if you don't" position when it comes to fair lending. Careful testing, analysis, and corrective action (where applicable) are paramount, as there are many occasions where relatively small actions can avoid complicated legal problems. Again, since we do not yet know the bank's side of the story in this case, it is possible Evans Bank took such measures and will be vindicated. Either way, lenders should take notice as the constraints on credit will likely lead to more redlining claims.
