The unusual lawsuit draws on secret videotapes and recordings to argue that the bank's loan officers discriminated against blacks, Latinos and Asians who applied for mortgages
One of the nation's largest banks discriminates against black, Latino and Asian homebuyers by offering lesser qualified white borrowers higher loan amounts and using hidden racial criteria in one of its loan programs, according to a lawsuit
filed this week in federal court in Manhattan. The suit also accuses the bank of steering homebuyers to certain neighborhoods based on their race or ethnicity.
The lawsuit claims that M&T Bank violated the landmark Fair Housing Act, a 1968 law that sought to end discriminatory lending practices and limit the historic segregation of many of the country's cities. The suit was filed by the Fair Housing Justice Center
, a New York City-based non-profit organization that is funded by the U.S. Department of Housing and Urban Development to enforce the federal law that bans housing discrimination.
Between 2012 and 2014, the Fair Housing Justice Center conducted a series of tests in which it sent out trained actors to explore whether white and non-white homebuyers would be treated differently when trying to prequalify for a mortgage. All followed a similar script, telling bank officers they were married with no children and were first-time homebuyers. The black, Latino and Asian testers presented slightly better qualifications when it came to income, credit and additional financial assets.
In nine separate interactions recorded either with a camera or an audio devices, employees at M&T Bank's New York City loan office can be seen or heard treating the white applicants differently than the others, according to the suit. In one instance, a black candidate was told she did not have enough savings to buy a home. A white applicant with slightly lower income and credit scores and $9,000 less in savings was pre-approved for a loan. In another case, a Latina candidate was told she would qualify for a mortgage $125,000 less than the test's white candidate with lower income, poorer credit and less cash.
"Defendant's conduct, as described above, constitutes discrimination in making available residential real estate-related transactions and in the terms and conditions of such transactions on the basis of race or national origin in violation of the Fair Housing Act," the lawsuit says.
A complaint against a lender based solely on secret testing is quite unusual. Several fair housing experts could not think of another case. Because lawsuits against banks typically results from statistical disparities, whistleblowers or consumer complaints, this case could open up a new legal means of pursuing discriminatory lenders.
M&T Bank spokesman Michael Zabel would not answer questions about the allegations in the lawsuit. He sent a one-paragraph statement that said the bank had the "highest percentage of African-American home purchase borrowers and dedicated the highest percentage of its deposits to community development lending. These facts reflect our deep commitment to fair lending, and to serving all of our neighbors in all of our communities," according to a report by the Association of Neighborhood Housing and Development. He also wrote that, "This issue is of the utmost importance to us, and we began taking steps immediately to investigate and address this claim."
New York-based M&T Bank is the 17th largest commercial bank holding company in the United States, according to the lawsuit. The regional bank operates more than 700 branches in New York and seven other states and Washington, D.C. The fair housing organization believes that the case pulls the curtain back on how discrimination still occurs in lending even though the kind of overt bigotry that prevailed generations ago is rarely seen. The lawsuit, it turns out, comes as the Supreme Court is actively considering the reach of the 1968
federal fair housing law.
, the executive director of the Fair Housing Justice Center, has been working in fair housing enforcement for nearly four decades and runs one of the most prolific fair housing testing agencies in the country. He also designed the U.S. Department of Justice's fair housing testing program.