M&T Bank Settles Probe Into Alleged Discriminatory Practices

Posted by Patrick Barnard on September 02, 2015 No Comments
Categories : Residential Mortgage

M&T Bank has reportedly agreed to pay $485,000 and to upgrade its mortgage lending policies to settle a lawsuit brought by a nonprofit group that accused the lender of discriminatory mortgage lending practices in New York City.

Terms of the settlement with the Fair Housing Justice Center and nine individuals will be in effect for three years, according to a Reuters report. The monetary penalty is for damages and to cover the plaintiff's legal fees.

The agreement bans M&T loan officers (LOs) from ‘steering’ borrowers to particular neighborhoods or loans based on their race or national origin, or using census tract data regarding race or national origin as a criterion in offering mortgages, Reuters reports.

As per the agreement, M&T has agreed to hire an independent consultant to improve training of its LOs.

The alleged discriminatory practices were discovered when female ‘testers’ hired by the nonprofit group posed as first-time home buyers who were married and had no children, according to Reuters.

The bank allegedly steered these non-white testers to buy homes in lower-income or ‘majority minority’ neighborhoods, such as Harlem in Manhattan or St. Albans in Queens. Meanwhile, white testers were encouraged to move to majority-white areas such as Murray Hill in Manhattan, according to the report.

M&T still faces a separate investigation by federal regulators as to whether it complied with underwriting guidelines for loans insured by the Federal Housing Administration and mortgages sold to Fannie Mae and Freddie Mac.

In agreeing to the settlement, the bank has admitted no wrongdoing, according to the report.

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