HSBC has agreed to direct $25 million over the next four years to support underserved communities in an agreement with the National Community Reinvestment Coalition (NCRC) following allegations of redlining, the parties announced on Wednesday.
In August 2023, the bank disclosed it was under investigation by the Department of Housing and Urban Development (HUD) after the nonprofit organization filed a complaint alleging violations of the U.S. Fair Lending Act.
According to the document, HSBC allegedly engaged in discriminatory lending practices in majority Black and Hispanic neighborhoods in six U.S. metropolitan areas from 2018 through 2021. It included New York (NY), Seattle (WA), Orange County (CA), Los Angeles (CA), Oakland (CA), and the Bay Area (CA).
NCRC withdrew the complaint in the spring, and talks toward the agreement began shortly thereafter. The new partnership begins in January and aims to expand economic opportunities in low—and moderate-income, diverse and underserved communities through loan subsidies, grants and donations.
“What began as a dispute turned into a conversation that will now expand a powerful bank’s work on behalf of lower-income communities, communities of color and other places that the whole banking industry has historically overlooked,” Jesse Van Tol, president and CEO of NCRC, said in a statement.
The HSBC US and Americas CEO Michael Roberts added that the partnership “reflects our shared commitment to fostering economic resilience and opportunity in communities across the U.S., and we are honored to support these efforts through our loans, investments and grants.”
HSBC has committed $10 million in loan subsidies, including $3.5 million to certain California markets. Another $4 million will be directed to grants to Community Development Financial Institutions (CDFIs) and community-based nonprofit organizations, $6 million will be donated to NCRC and $1 million will go towards community engagement initiatives.
According to the mortgage tech platform Modex, HSBC originated about $3.5 billion in mortgages in the last 12 months, most of them purchases (77% of the total) and conventional (90%) loans. California and Washington are the bank’s main markets. The Nationwide Multistate Licensing System (NMLS) shows 87 registered mortgage loan officers as of Wednesday.