Trustmark gets early exit from redlining consent order

Trustmark National Bank is enjoying an early exit from a consent order stemming from a Biden-era redlining investigation. 

The Jackson, Mississippi-based lender and servicer is free of the settlement with regulators 17 months early, following a federal judge's approval last week. The Department of Justice, the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency announced the $5 million settlement with Trustmark in October 2021. They filed a motion to terminate that agreement last Tuesday. 

The update was first reported by Law360. 

The move is the latest deregulatory effort by the Trump administration, which has drastically pulled back enforcement actions initiated by its predecessors. The Trustmark case kicked off a spate of redlining prosecutions in the past three years by President Biden's DOJ and CFPB.

Trustmark CEO Duane Dewey in a statement Thursday praised the move, which was approved quickly in a Tennessee federal court by U.S. District Judge Samuel H. Mays, a President George W. Bush appointee. 

"This dismissal, some 17 months early, is a result of Trustmark's substantial compliance and remediation efforts through extensive work by our team, and we look forward to moving forward," said Dewey.

The depository counts 170 banking centers across the Southeast, and originated $1.4 billion in loan volume in 2024, according to recent earnings reports.

What did Trustmark do?

Regulators accused the $18 billion asset bank of discriminating against Black and Hispanic borrowers in Memphis between 2014 to 2018, and discouraging prospective minority applicants from applying for home loans. According to prosecutors, the bank then operated just 4 of its 25 full-time service branches in majority-minority Census tracts, despite half of the city's census tracts being majority-minority. 

Trustmark allegedly closed its sole limited-service branch in a majority-minority neighborhood, and avoided locating branches or hiring loan officers in those communities. The bank in signing the settlement denied the accusations. 

Feds recently said Trustmark was "substantially in compliance" with the terms of the agreement, including distributing $3.8 million in a loan subsidy fund to increase credit for minority mortgage applicants. The lender also paid a $5 million civil money penalty, of which $1 million went to the CFPB and the remaining $4 million to the OCC. 

Last week's 4-page filing didn't contain other details, but the bank was also required to spend hundreds of thousands of dollars on related financial services to majority-Black and Hispanic Census tracts across Memphis.

The dismissal was signed by Joseph Murphy Jr., the interim U.S. Attorney for the district who was appointed by U.S. Attorney General Pam Bondi, and by attorneys with the DOJ's Civil Rights Division. CFPB Chief Legal Officer Mark Paoletta also agreed to the dismissal. 

The CFPB has been especially active lately in rescinding enforcement against mortgage lenders, dropping a few lawsuits in recent months and seeking to reverse a separate, already ruled-upon redlining settlement with another brokerage. Acting Director Russell Vought has also sought to block states from enforcing consumer protection laws.