Business & Money

Major bank charged with housing discrimination

By Nisa Islam Muhammad -Staff Writer- | Last updated: Feb 18, 2015 - 9:47:50 PM

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Thought housing discrimination was a thing of the past?  Think again. The Fair Housing Justice Center and nine Black, Hispanic, South Asian and White testers have filed a federal lawsuit charging the M&T Bank Corporation “discriminates in its mortgage lending practices on the basis of race and national origin.”

The Fair Housing Justice Center conducted a two-year investigation, 2012-2014, of the bank’s first time homebuyer program called Get Started and the possibility bank loan officers would treat differently based on race and national origin.

The probe found: 

· An M&T loan officer informed a South Asian tester that she would likely qualify to purchase a $400,000 home with a maximum loan amount of $320,000 and she was encouraged to use the Get Started program.  The same loan officer told a lesser qualified White tester that she could afford a higher priced home, up to $450,000, she would qualify for a larger conventional mortgage of $405,000, and she was not told about the Get Started program. 

· An M&T loan officer told a Black tester about the option of using the Get Started program and encouraged the tester to consider predominately minority neighborhoods. The same loan officer never mentioned using the Get Started program to the White tester and instead recommended that she look at purchasing her first home using conventional financing in predominantly White neighborhoods. 

· An M&T loan officer told a Latina tester that she would likely qualify for a conventional loan of $405,000 to purchase a $450,000 home, while the same loan officer told a lesser qualified White tester that she would likely qualify for a conventional loan of $530,000 to purchase a home up to $550,000. The loan officer briefly mentioned the Get Started program to the White tester but stated, “I highly doubt that you’re gonna’ buy in an area where you’re a min … more minority than majority.” Later in their conversation the loan officer again reminded the White tester that if she used the Get Started program she would have to buy in a majority minority area and added, “if you get what I mean.”  

“Too often, ordinary home buyers are unaware of how consumers of other races and national origins are being treated. Using testers as ‘proxies’ for real home buyers afforded us a unique opportunity to learn whether everyone is being afforded the same information and service. This investigation demonstrates that testing can be effectively employed to document unfair and discriminatory lending practice,” explained The Fair Housing Justice Center.

M&T Bank, formerly Merchant & Traders Trust Company, was founded in 1856 in western New York is headquartered in Buffalo. It is believed to be the 17th largest commercial bank in the United States. As of 2014, M&T Bank had $134.4 billion in assets and more than 700 branches in New York, New Jersey, Pennsylvania, Maryland, Delaware, Florida, Virginia, West Virginia, and Washington, D.C.

Bank spokesman Michael Zabel responded to a press inquiry by Pro Publica by saying the bank had the “highest percentage of African-American home purchase borrowers and dedicated the highest percentage of its deposits to community development lending.”

“This issue is of the utmost importance to us, and we began taking steps immediately to investigate and address this claim,” he said.  

The nine plaintiffs in this lawsuit posed as married households looking to purchase their first home. In the pre-application tests, they asked the lender to help them figure out how much they could afford to purchase before beginning their search and prior to working with a real estate agent. Minority testers were given more income, greater assets, fewer debts, and better credit scores than their White counterparts.

“These discriminatory policies and practices are precisely the type of conduct that the federal Fair Housing Act was intended to prohibit and prevent,” center executive director Fred Freiberg said. “What this case presents is a contemporary twist on an old and familiar story. The bottom line is that race and national origin appears to be infecting the policies and practices of this lender in a way that limits housing choice, provides unequal information based on race and national origin, and fosters residential segregation.”

The lawsuit seeks injunctive relief to stop the discrimination and ensure future compliance with fair housing and fair lending laws in addition to damages, costs, and attorneys’ fees.