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Bank accused of racial discrimination in mortgage lending

Many people throughout Michigan and across the country still face unlawful discrimination in housing and lending. According to a new lawsuit, Liberty Bank discriminated against mortgage borrowers in African American and Latino neighborhoods in two Connecticut cities. The lawsuit was filed by the National Consumer Law Center and the Connecticut Fair Housing Center. They accused the bank of “redlining,” denying home loans or avoiding giving credit to buyers because of the racial or ethnic identifications of their neighborhoods.

Redlining is a prohibited practice under the federal Fair Housing Act. According to an attorney filing the lawsuit, the case came after a two-year investigation that involved examining the bank’s lending data. The suit alleges that from 2010 to 2016, the bank originated 1,197 home loans each year, but only 40 of those annually were to African American or Latino home buyers. This was 3.34 percent of all completed loans. The complainants said that the bank made more loans than expected in white areas and fewer in those identified as African American or Latino.

They also sent pairs of “testers” to apply for home loans in order to judge how white, black and Latino applicants were treated by the same bank branch. White customers were allegedly provided with better service and encouragement to apply for mortgages, while Latino or black customers were more likely to receive limited information or discouragement, they said.

Cooperative housing boards must be aware of fair housing issues like these when reviewing applications for membership. The Fair Housing Act and Americans with Disabilities Act apply not just to lenders but also to co-op boards. A cooperative housing attorney can help boards make sure that they are in compliance with fair housing and anti-discrimination law.