Law­suit al­leges race bias in lend­ing

Ul­ster Sav­ings Bank ac­cused of vi­o­lat­ing Fair Hous­ing Act

Daily Freeman (Kingston, NY) - - FRONT PAGE - By Paul Kirby pkirby@free­manon­line.com paulat­free­man on Twit­ter

KINGSTON >> A fed­eral law­suit al­leges Ul­ster Sav­ings Bank has dis­crim­i­nated against African Amer­i­cans in its mort­gage prac­tices.

The non­profit Fair Hous­ing Jus­tice Cen­ter says in the suit, filed Nov. 4 in U.S. Dis­trict Court in White Plains, that it con­ducted a two-year in­ves­ti­ga­tion of the lend­ing prac­tices of Ul­ster Sav­ings Bank by us­ing black and white “testers.” The suit says the bank’s ac­tions vi­o­lated the fed­eral Fair Hous­ing Act, which is in­tended to pro­tect a buyer or renter of a dwelling from dis­crim­i­na­tion.

“Through­out an ex­ten­sive in­ves­ti­ga­tion, span­ning nearly two years, the non­profit Fair Hous­ing Jus­tice Cen­ter Inc. dis­cov­ered that Ul­ster Sav­ings Bank loan of­fi­cers — across ge­ographi-

cally dif­fer­ent of­fices — re­peat­edly of­fered less-fa­vor­able and lower loan pack­ages and op­tions to African Amer­i­cans than to their white coun­ter­parts, even as the African Amer­i­cans pre­sented with higher in­come, more cash sav­ings, lower monthly li­a­bil­i­ties and bet­ter credit scores than those white coun­ter­parts,” the law­suit states. “For ex­am­ple, one African-Amer­i­can tester was told he qual­i­fied for a max­i­mum loan amount that was $200,000 less than his white coun­ter­part. Another African-Amer­i­can tester was in­formed she could af­ford a pur­chase price that was $150,000 less than the max­i­mum pur­chase price her white coun­ter­part was told she could af­ford.”

Ul­ster Sav­ings Bank Chief Ex­ec­u­tive Of­fi­cer Wil­liam Calder­ara would not com­ment on the al­le­ga­tions in the suit be­cause of the pend­ing le­gal ac­tion but said the bank, founded in 1851 and now based on Sch­wenk Drive in Kingston, “is very proud of our his­tory and serv­ing our com­mu­nity.”

He said the bank never was con­tacted by the Fair Hous­ing Jus­tice Cen­ter, be­came aware of the al­le­ga­tions only af­ter the law­suit was filed and “will look into” the ac­cu­sa­tions.

Fred Freiberg, ex­ec­u­tive di­rec­tor of the New York City-based Fair Hous­ing Jus­tice Cen­ter, said in a press re­lease that peo­ple who ap­ply for loans have a right to ex­pect they will be treated fairly.

“When peo­ple pre­pare to pur­chase their first home, they have ev­ery right to ex­pect that lenders will not treat them dif­fer­ently or pro­vide dif­fer­ent in­for­ma­tion based on their race. Freiberg said. “Lenders must take steps to en­sure that bias does not in­fect their lend­ing poli­cies and prac­tices.

“Lend­ing dis­crim­i­na­tion di­min­ishes the abil­ity of African Amer­i­cans to equally and fully share in the ben­e­fits of home­own­er­ship and makes that cher­ished Amer­i­can dream more elu­sive,” he added.

The law­suit — which lists African-Amer­i­can “testers” Lisa Dar­den, Claude Jay Jones and Adri­enne Wil­liams as co-plain­tiffs with the Fair Hous­ing Jus­tice Cen­ter — also says sev­eral loan of­fi­cers ap­peared to guide African Amer­i­cans to­ward com­mu­ni­ties with higher per­cent­age mi­nor­ity pop­u­la­tions, while guid­ing po­ten­tial white bor­row­ers to­ward lo­ca­tions with pro­por­tion­ately whiter pop­u­la­tions.

“In­deed, Ul­ster Sav­ings Bank’s en­tire struc­ture seems point­edly crafted to avoid lend­ing its money to African Amer­i­cans to achieve the Amer­i­can dream of buy­ing a home,” the law­suit says.

The suit also al­leges the bank has avoided open­ing of­fices in mi­nor­ity neigh­bor­hoods.

“De­spite a ro­bust and ap­par­ently grow­ing busi­ness, Ul­ster Sav­ings Bank ap­pears stu­diously to have avoided open­ing of­fices in pre­dom­i­nantly mi­nor­ity towns or vil­lages, and even in one in­stance when it did, the bank avoided plac­ing a loan of­fi­cer in that bank,” the law­suit claims.

The suit al­leges that “over the most re­cent five years of pub­licly avail­able data, from 2011 to 2015, it made only 40 pri­mary loans to African-Amer­i­can bor­row­ers or co-bor­row­ers for prin­ci­pal home pur­chases out of a to­tal of 1,599 such mort­gages.”

The law­suit does not say how many African-Amer­i­can loan ap­pli­cants or other ap­pli­cants were turned down for mort­gages, so it was not im­me­di­ately clear if ap­pli­ca­tions by blacks were re­jected at a higher rate than those sub­mit­ted by whites. An email to the Fair Hous­ing Jus­tice Cen­ter ask­ing for the in­for­ma­tion was not an­swered Tues­day.

“For African Amer­i­cans, Ul­ster Sav­ings Bank is not ‘a lender you can trust,’” the law­suit says, turn­ing the bank’s motto against it. “In­stead, it is a lender that seeks to court and fa­vor oth­ers and to avoid lend­ing African Amer­i­cans money to pur­chase homes or, at a min­i­mum, to avoid mak­ing mort­gages to African Amer­i­cans on the same or equally ben­e­fi­cial terms and con­di­tions as whites.”

In the law­suit, the cen­ter says the bank’s lend­ing prac­tices have mul­ti­ple con­se­quences.

“Most im­me­di­ately, the re­sult of buy­ing low­er­priced homes gen­er­ally means that African Amer­i­cans are pur­chas­ing lower val­ued homes, which, in turn, re­sults in their ob­tain­ing less eq­uity in their homes and re­strict­ing their abil­ity to ac­quire long-term wealth,” the law­suit says. “Equally crit­i­cally, buy­ing lower-priced homes gen­er­ally means African Amer­i­cans are be­ing di­rected into ar­eas with fewer op­por­tu­ni­ties and op­tions, whether it is be­cause the lo­cal schools are not quite as high-achiev­ing, be­cause the trans­porta­tion routes to higher pay­ing jobs are more time con­sum­ing or be­cause ba­sic ameni­ties are more lim­ited. “

The law­suit says it seeks to “cor­rect and to rem­edy Ul­ster Sav­ings Bank’s un­ac­cept­able and far-reaching be­hav­ior.”

The suit does not seek a spe­cific dol­lar amount but asks for “declara­tory and in­junc­tive re­lief, com­pen­satory dam­ages, puni­tive dam­ages and an award of costs and at­tor­neys’ fees.”

In a press re­lease, the Fair Hous­ing Jus­tice Cen­ter of­fered the fol­low­ing ex­am­ples of what it says was loan dis­crim­i­na­tion based on the race of the cen­ter’s “testers.”

• At an Ul­ster Sav­ings Bank of­fice in River­head, on Long Is­land of­fice, a loan of­fi­cer, af­ter ob­tain­ing in­for­ma­tion about the qual­i­fi­ca­tions of each tester, quoted a max­i­mum loan amount to an African Amer­i­can man that was $200,000 less than the loan amount pro­vided to his white coun­ter­part. The loan of­fi­cer of­fered loan op­tions to the white tester that would make it pos­si­ble for him to put less than 20 per­cent of the pur­chase price down and avoid pay­ing pri­vate mort­gage in­surance, while th­ese op­tions were never men­tioned to the African-Amer­i­can tester.

• At an Ul­ster Sav­ings Bank of­fice in White Plains, an African-Amer­i­can woman was told she would qual­ify for a lower max­i­mum loan amount and a lower priced home than her white coun­ter­part. The African-Amer­i­can tester was told she would qual­ify for a loan up to $400,000, and the white tester was in­formed she would qual­ify for a max­i­mum $495,000 loan. The African-Amer­i­can tester was told the clos­ing costs prob­a­bly would be $20,000 to 25,000, while the white tester was told clos­ing costs would be about $15,000.

• At an Ul­ster Sav­ings Bank of­fice in Goshen, an African-Amer­i­can man was told he qual­i­fied for a lower loan amount and low­er­priced home than his white coun­ter­part. A white woman was told she could af­ford to pur­chase a $500,000 home ,while the African-Amer­i­can man was told about he could pur­chase a home for up to $400,000. The African-Amer­i­can tester was in­formed he prob­a­bly would be charged half a point at clos­ing, while the white tester was told at the out­set that no points would be charged on her loan. Also, the loan of­fi­cer sug­gested the African-Amer­i­can tester search for a home in ar­eas with higher mi­nor­ity pop­u­la­tions.

• At an Ul­ster Sav­ings Bank of­fice in Pough­keep­sie, an African-Amer­i­can woman was told she would qual­ify for a lower max­i­mum loan and a low­er­priced home than her white coun­ter­part. The loan of­fi­cer cal­cu­lated fi­nanc­ing for the African-Amer­i­can tester on a $400,000 home, while the white tester was told she could af­ford a $600,000 home. The African-Amer­i­can tester was told she would be charged a frac­tion of a point if she put down less than 25 per­cent down at clos­ing, while the white tester was told she would not be charged any points. Also, the African-Amer­i­can tester was quoted $1,800 in bank fees, while the white tester was quoted fees of $1000 to $1,100.

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