Magazine article American Banker

Justice Probing MAF of Illinois' Minority Lending

Magazine article American Banker

Justice Probing MAF of Illinois' Minority Lending

Article excerpt

The Justice Department is investigating whether a community bank in suburban Chicago violated anti-discrimination laws by making too few mortgage loans in communities with a high percentage of minority residents.

In a Securities and Exchange Commission filing on Thursday, MAF Bancorp of Clarendon Hills, Ill., announced that its principal subsidiary, Mid America Bank, is under federal scrutiny. At issue is whether the bank -- which has $5.6 billion of assets and 33 branches in the Chicago area -- failed to comply with the Fair Housing Act and the Equal Credit Opportunity Act.

Kenneth Koranda, the president of MAF Bancorp, said in an interview that the reasons for the Justice Department's probe were not completely clear.

"We don't know what caused the investigation," he said. "They have told us that it did not have to do with any pricing or underwriting issue, but that in their statistical analysis they felt that we needed to do more lending in certain minority census tracts."

A Justice Department spokeswoman said that as a matter of policy it does not comment on ongoing investigations. However, she noted that the department has the authority to act on violations of the acts on its own or on the advice of regulatory agencies.

This is not the first time questions have been raised about Mid America's minority lending record. In August last year, the Woodstock Institute, a Chicago-based fair housing group, filed a protest with the Office of Thrift Supervision against the bank's proposed acquisition of Mid-Town Bank in Chicago.

In a letter to the OTS, Woodstock president Malcolm Bush criticized the way the bank had drawn its service area for purposes of complying with the Community Reinvestment Act. Mr. Bush said that the bank had arbitrarily excluded areas with large minority populations.

In addition, Mr. …

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