Lawsuit alleges race bias in lending
Ulster Savings Bank accused of violating Fair Housing Act
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.