Mortgage

Evans Bank settles with New York over redlining

Must begin lending in Buffalo’s predominantly African-American neighborhoods

The State of New York announced Thursday that it reached a settlement with Evans Bank (EVBN) over allegations of unlawful discriminatory mortgage practices, also called redlining.

New York sued Evans Bank last year, accusing the bank of “systematically” denying its mortgages and services to African-Americans in the Buffalo metro area.

According to the lawsuit, Evans Bank allegedly created a map of its lending area, which included most of the city of Buffalo, but excluded the predominately African-American neighborhoods on Buffalo’s East Side.

The settlement, announced by Eric Schneiderman, New York’s attorney general, requires Evans to revise its lending area to include the East Side neighborhoods and other neighborhoods previously excluded from the bank’s lending area due to the neighborhood’s racial composition.

The settlement also requires Evans to establish an $825,000 settlement fund designed to promote homeownership and affordable housing in Buffalo and to encourage lending activity in the East Side and other previously excluded areas.

“It is essential that all New Yorkers, regardless of the color of their skin or the racial make up of their neighborhoods, be afforded equal access to our banking systems – and the basic benefits of obtaining a mortgage," Schneiderman said.

“That we continue to see systematic racial and housing discrimination in New York in 2015 is shocking,” Schneiderman continued. “I will not stand for it.”

New York’s lawsuit alleged that, from at least 2009 to the present, Evans had redlined Buffalo’s predominantly African-American East Side neighborhoods, intentionally excluding these neighborhoods from its lending area.

Evans Bank also allegedly developed mortgage products that it made unavailable to these neighborhoods, notwithstanding the creditworthiness of the applicants; and refused to solicit customers, market mortgages or provide banking facilities in those neighborhoods.

The lawsuit alleged that by redlining the East Side neighborhoods, which are home to more than 85,000 people, Evans excluded an area that is home to the vast majority of Buffalo’s African-American population from the marketing and sales of its mortgage products and services.

The state’s lawsuit also alleged that Evans created a map defining its lending area that included most of the City of Buffalo and the surrounding area, but excluded the predominantly African-American neighborhoods on Buffalo’s East Side.

Evans reportedly called the included areas on its map its “trade area.” By excluding certain neighborhoods from its trade area, Evans automatically disqualified East Side residents — regardless of their creditworthiness — from obtaining certain mortgage products and excluded the East Side from its marketing efforts, Schneiderman’s office said in a statement.

The settlement agreement requires that Evans, which expanded its trade area to include all of Erie and Niagara counties after being sued by New York, maintain its expanded trade area, including the East Side neighborhoods and all other previously excluded areas in the greater Buffalo area.

The settlement agreement creates the Housing Opportunity Fund, which will be supported by a grant from Evans of $475,000, part of the total settlement amount, to the city of Buffalo to fund programs managed by the Office of Strategic Planning encouraging homeownership and development and restoration of affordable housing in Buffalo.

The agreement also requires Evans to invest $200,000 in advertising and marketing designed to reach potential applicants and residents of the East Side and other areas previously excluded from the bank's trade area.

The agreement requires Evans to invest $100,000 in grants, fee waivers, and other subsidies as part of a special financing program designed to increase lending activity on the East Side and in other previously excluded areas.

Evans will also pay $50,000 to the state of New York in costs and fees.

The settlement requires Evans to revise its loan policy to eliminate any minimum mortgage amount, to provide fair lending training to employees and agents with significant involvement in mortgage lending, and to report information to the Attorney General to ensure compliance.

“We will fight for equal justice under law for all New Yorkers, and hold lenders to their legal duty to treat all our citizens fairly in the marketplace,” Schneiderman concluded. “That fight includes holding big banks accountable for the housing collapse of 2008, one that hit minority communities the hardest – and all banks to their bottom-line legal duty not to discriminate.”

Read more about redlining in the HousingWire Magazine feature, Housing Discrimination.

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