(Reuters) -The U.S. Justice Department and the Consumer Financial Protection Bureau penalized Fairway Independent Mortgage Corporation for alleged redlining in Black neighborhoods in Birmingham, Alabama, the agencies said on Tuesday, which the company denies.

The mortgage lender will pay a $1.9 million penalty and provide $7 million in loan subsidies as a result, the CFPB said in a statement.

Fairway determined that a settlement with the bureau would be the most appropriate solution, the company said in a statement.

U.S. Attorney General Merrick Garland said the case was a "reminder that redlining is not a relic of the past and the Justice Department will continue to work urgently to combat lending discrimination wherever it arises."

Garland said the enforcement action was part of a Justice Department initiative to combat redlining, the illegal practice of restricting mortgage lending to certain areas based on occupants' race or ethnicity that was banned in 1974.

Officials accuse the company of failing to take action when its own data showed the company was not serving majority Black areas between 2018 and 2022 and of focusing its marketing efforts in majority-white areas between 2015 and 2022.

Fairway said the government agencies did not identify any evidence of redlining or other discrimination.

As part of a proposed consent order, the company will also pay at least $1 million to open a new office in a majority-Black neighborhood, including advertising, outreach, consumer financial education and community partnerships.