Nonprofits File Federal Housing Lawsuit Against Liberty Bank
MIDDLETOWN, CT — Two nonprofit organizations spent two years testing Liberty Bank’s lending practices when it comes to African-American and Latino homebuyers before filing a federal lawsuit last week accusing the bank of redlining.
The Connecticut Fair Housing Center, Inc. and National Consumer Law Center filed a complaint against Liberty Bank alleging the company has been “denying or avoiding providing credit services to consumers because of the racial or ethnic demographics of their neighborhoods.”
Liberty Bank, the third-largest bank in Connecticut, said it’s aware of the lawsuit and is taking the accusations seriously.
“We are actively looking into the matter and are unable to comment further at this time,” a statement from the bank reads.
An investigation by the Connecticut Fair Housing Center revealed that, going back to at least 2010, Liberty Bank has originated a significantly lower percentage of residential mortgage loans for properties in neighborhoods of color when compared with similar lenders.
“Redlining systematically denies people who live in neighborhoods of color access to homeownership, therefore denying them the opportunity to build wealth,” Connecticut Fair Housing Center Executive Director Erin Kemple said. “Unfortunately, fifty years after the passage of the Fair Housing Act, the practice continues. Liberty Bank is choosing to offer less assistance to communities of color in violation of the state and federal fair housing laws.”
According to the complaint the discriminatory lending practices by the bank were evident in Middletown where it is headquartered and has five branches.
Despite, Middletown’s population being slightly more than 1 in 5 African-American or Latino, the nonprofit housing centers say the bank only took in roughly half the loan applications filed by people of color in comparison to its competitors.
In one of several in-person tests, an African-American tester was sent to meet with a Liberty Bank loan officer in May 2017 at the 55 High Street branch location in Middletown. A white tester was sent to the same location the next month to meet the same officer.
The African-American tester was given a monthly payment estimate of $2,023, which was over $300 more than the estimate the white tester received even though the house the African-American tester suggested was “cheaper and had lower taxes” than the house the white tester had suggested to the loan officer.
The loan officer’s interaction with the two testers, according to the complaint, was noticeably different. The officer told the white tester he was available after business hours to discuss any needs and provided a copy of his notes, but never offered similar assistance or copy of his notes to the African-American tester.
In another test between December 2016 and January 2017, the African-American and white testers experienced different interactions and demeanor when meeting the same loan officer.
Both testers gave similar information about homes in Plantsville with similar taxes. The loan officer told the white tester she had chosen a “nice” home, however, expressed concerns to the African-American tester about the landscaping and that it might be a flip.
“He hypothesized that a veteran or elderly person lived in the home and that taxes would shoot up once the African-American tester purchased it,” the complaint states.
The loan officer also made several impolite remarks toward the African-American tester. The officer assumed the African-American tester’s husband was paid hourly and referred to him as “hubby,” but said “husband” in reference to the white tester’s husband and made no assumptions or posed questions about how the couple’s earnings.
The officer also told the African-American tester she couldn’t take notes until, “he told her to write things down.” The white tester faced no restrictions in taking notes.
The nonprofit housing centers also point to Liberty Bank’s expansion to several towns across Connecticut starting in 2010. Liberty Bank expanded by merger into several towns, including, Plainville and Bristol in 2010. Yet, there were few loans in those areas, except in predominantly white Plainville, Farmington, and West Hartford.
The Connecticut Fair Housing Center, Inc. and National Consumer Law Center are seeking monetary damages.