Listen to Jon Seward discuss his work:
In August 2019, First Merchants Bank settled a Justice Department lawsuit charging that it engaged in unlawful redlining in Indianapolis by intentionally denying mortgage loans and other credit to residents of predominantly African American neighborhoods.
This Indiana case, which resulted in a number of financial remedies, is one of dozens of lawsuits Jon Seward oversaw or litigated during nearly three decades of federal service, earning him a reputation as a national leader in the area of fair lending enforcement.
“In his 27 years of federal service, Jon has ensured that tens of thousands of people have obtained equal access to credit, such as loans to buy or rebuild homes,” said Assistant Attorney General Eric Dreiband. “He has transformed how banks extend credit to people across the country, particularly in underserved and minority communities.”
While Seward’s work has resulted in deserving borrowers getting credit and fair mortgages, he has also shown lenders the wisdom and financial benefits of moving into underserved markets where they earned new customers and grew revenues.
“He makes banks feel like they are a part of the solution,” said Varda Hussain, managing counsel for fair lending enforcement at the Federal Reserve Board.
This approach is all the more remarkable because businesses tend to raise their hackles when accused of discriminating.
“Banks come in and typically are very defensive,” said Lucy Carlson, deputy chief in the Justice Department’s Housing and Civil Enforcement Division. “Through Jon’s collaborative attitude, the outcome often leaves banks working toward common goals for both community residents and their own business interests.”
“He has a knack for building trust,” said Greg Friel, deputy assistant attorney general for the DOJ’s Civil Rights Division.
For example, in 2015 Seward led a team in the government’s largest-ever redlining case: an allegation that Hudson City Savings Bank had failed to serve the African American and Hispanic neighborhoods in multiple cities in northern New Jersey, New York City, Philadelphia, and Bridgeport, Connecticut, depriving residents of access to home loans. The bank denied wrongdoing, but nevertheless agreed to create a $25 million loan subsidy fund. It opened two full-service branches to serve previously redlined neighborhoods.
Two years later, the bank’s outreach efforts reached thousands of potential homebuyers in the redlined areas, and its lending business there more than tripled.
“These changes aren’t sustainable unless they’re sustainable for the banks as well,” said Shina Majeed, the Justice Department’s housing and civil enforcement chief.
Seward started his civil rights career enforcing fair housing laws at the Department of Housing and Urban Development. He joined the DOJ as a trial attorney in 1994 and became the department’s first fair-lending deputy. He joined Fannie Mae in 2003, where he developed a compliance system to help to ensure minority borrowers are treated fairly in the secondary mortgage market. He returned to the DOJ in 2008 where he developed an innovative law enforcement response to unfolding housing foreclosure crisis.
When Seward first arrived at the Justice Department, fair-lending cases came mostly from referrals by regulatory agencies but, in some years, it received few referrals. So, early in his career, Seward implemented a screening process, looking for outliers in the market that could signal the need for further action, and for solutions that would demonstrate how banks could benefit, too.
In 2013, he addressed redlining of African American neighborhoods in Pagedale, Missouri, where many households lacked checking or saving accounts and relied on payday lenders. Through a settlement with Midwest BankCentre—Dreiband called it “transformative”—Pagedale got its first branch in its then 63-year history and hundreds of first-time borrowers opened accounts and received loans.
In 2018, the Midwest BankCentre received an award from the Independent Community Bankers of America for its outstanding work in minority communities. In 2019, the bank won a similar award from the American Bankers Association Foundation. Seward said the results from the DOJ lawsuit have been a “win-win for everyone.”
Seward also spearheaded the government’s case against Wells Fargo Bank, the second-largest fair lending case to date. The government charged that the bank discriminated against African American and Hispanic borrowers by steering them to costly subprime mortgages when they qualified for cheaper prime loans, and by charging them higher fees and rates than white borrowers with similar credit profiles. The case brought $234 million in compensation to more than 45,450 people across the country, including down payment assistance that enabled 2,400 first-time homebuyers to purchase homes
In last year’s settlement in Indiana, First Merchants Bank agreed to invest $1.12 million to increase credit opportunities in the predominantly African American neighborhoods and to devote $500,000 toward advertising, community outreach, credit repair and education. The bank also pledged to open a branch and loan office to serve the needs of residents.
“It’s hard to overstate the impact that Jon has had,” said Friel, the deputy assistant attorney general for the Civil Rights Division. “He’s affected hundreds of thousands of people within areas where they couldn’t access credit.”
Seward said his years of work have been very rewarding. “You cannot put a price tag on the feeling that you’re making a difference in people’s lives,” he said.