Feds say this Minnesota bank doesn't serve people who live in minority neighborhoods

It's called redlining, and it's illegal.

A Minnesota bank is being sued by the Department of Justice for discriminating against minorities.

In a lawsuit filed Friday, the Department of Justice says Chaska-based KleinBank denied or avoided providing its mortgage-lending services to people who live in neighborhoods where the majority of residents are minorities.

The lawsuit says KleinBank made loans in minority neighborhoods four times less than the rate of comparable lenders.

Federal officials allege KleinBank excluded minority neighborhoods from its service area; it's branches and mortgage loan officers were located in white neighborhoods, but not in minority ones; and it targeted its marketing and advertising toward residents who live in white neighborhoods.

This is called "redlining" and it's a violation of the Fair Housing Act and Equal Credit Opportunity Act, a news release says.

“Redlining produces an unequal and unlevel playing field for borrowers in minority neighborhoods,” Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division, said in the release. “Cases like this one demonstrate the Justice Department’s strong commitment to hold banks accountable for continuing and perpetuating historic trends of inequality in residential mortgage lending.”

GoMN has reached out to KleinBank for comment, but it is closed Monday for the Martin Luther King Jr. federal holiday.

KleinBank opened in Minnesota in 1907, and now has 21 branches and 400-plus employees, with assets totaling $1.8 billion, the bank's website says. The bank lists several awards, including ethics awards, being the best mortgage company and best bank.


Redlining became a common practice after it was introduced back in 1934. The Home Owner's Loan Corporation drafted maps of communities to show which areas were worthy of getting loans. They were ranked and color-coded, with minority neighborhoods typically getting rated a D or "hazardous" and were outlined in red, NPR said

The program was celebrated for guaranteeing loans for white people, but refused to back loans for black people or people who lived near in predominately black neighborhoods, The Atlantic reported.

The practice of redlining spread throughout the mortgage industry, and lasted until 1968 when the Fair Housing Act was introduced. Redlining created the neighborhoods we live in today, and you can see it all on this interactive map, which includes Minneapolis and Duluth. It shows the redlined neighborhoods and includes information on why the neighborhoods got each ranking.

Next Up

Flickr - Xcel Energy truck - Tony Webster

Xcel Energy wants to raise MN customers' electricity rates

If approved, rates go up by an average of $18.50 a month for customers.

Screen Shot 2021-10-27 at 1.11.05 PM

MPD chief 'confident' officers will still show up after Question 2 vote

Arradondo held a press conference Wednesday in which he urged for a 'No' vote.

J R Jones - Anoka County Jail 2021.10.16 - Resize crop

Charges: Driver in fatal hit-and-run said he thought he hit dog or sign

The crash killed a 56-year-old Blaine woman who had been out walking her dog.

vaccine, covid

Here is Minnesota's plan to vaccinate kids 5-11 against COVID-19

The plan includes hosting vaccination clinics at schools across the state.

Mounds View PD missing 12yo Riddley

12-year-old Twin Cities boy has been missing for 4 days

Police are asking for the public's help locating the child,

moorhead police

Police searching for man charged with kidnapping woman at gunpoint

The man approached the victim's car and pointed a gun at her, the charges state.

teacher, coronavirus, covid-19, school, classroom

Teachers union calls for 'bold' plan to get kids vaccinated against COVID

"All options should be on the table," Denise Specht, president of Education Minnesota, said.


Madden's has banner summer with surge of visitors to Gull Lake

The resort was named the No. 1 resort in the mid-Atlantic and Midwest.


Trump says 'stop it' to supporters who are harassing minorities

Several incidents of hate speech and harassment has been reported in Minnesota, too.

It's also a big weekend for people who shop but don't pay

Losses and arrests go up in November and December

Feds close Minnesota bank

The FDIC shutdown Patriot Bank in Forest Lake Friday. First Resource Bank in Savage agreed to take over the assets and deposits from the failed Minnesota bank. There have been seven U.S. bank failures in 2012. Patriot Bank is the first to fail in Minnesota this year.

St. Anthony PD is being reviewed by the feds at its own request

They'll review how officers interact with the community.

Minnesota's TCF Bank to merge with Detroit-based bank

The TCF name is staying, with Detroit's Chemical Bank changing its name.

Black bicyclists are likely stopped by police more than white bicyclists, report says

It's likely that black bicyclists are stopped and cited more often for minor violations than white bicyclists.

Fed says Minnesota banks almost back to normal after financial crisis

An executive with the Federal Reserve Bank of Minneapolis says profits and the quality of loans held by Minnesota banks are almost back to their historical averages. Those still hurting are mainly Twin Cities area banks that invested in commercial real estate in outer-ring suburbs.