Mortgage Daily

Published On: October 5, 2018

HARTFORD, Connecticut — Middletown-based Liberty Bank was accused Thursday of discriminating against home loan borrowers in African American and Latino neighborhoods in greater Hartford and New Haven in a lawsuit filed in federal court.

The Connecticut Fair Housing Center and the National Consumer Law Center alleged that the bank violated the Fair Housing Act by “redlining” — denying to provide or avoiding giving credit to borrowers because of the racial or ethnic demographics of their neighborhoods.

Jeff Gentes, managing attorney at the fair housing center, said Thursday that the lawsuit came after a two-year investigation that looked at lending data reported by the bank to regulators and at “testers” sent into branches to apply for loans.

Chandler Howard, Liberty’s chief executive officer, declined to comment Thursday, saying the bank was reviewing the documents.

During the period evaluated by the fair housing center — 2010 to 2016 — the lawsuit alleges Liberty originated, on average, just 40 home loan applications to African American and Latino borrowers out of a total of 1,197 originations a year.

“In other words, only 3.34 percent of Liberty Bank’s total originations from 2010 to 2016 were to African American and Latinx applicants,” the lawsuit alleges.

“Given their lending volume and size, they make more loans than you would expect in white areas and fewer than you would expect in African African and Latino areas,” Gentes said.

In addition to the data, the fair housing centers sent pairs of “testers” into five Liberty Bank branches — one white and the other African American or Latino — with similar stories but they came back with different responses, Gentes said.

One test targeted the Liberty branch at 171 Silas Deane Highway in Wethersfield with the purpose of getting copies of advertising materials for mortgages.

A white tester on Feb. 2, 2017, was given a loan officer’s card immediately and taken over the brochures about Liberty mortgages, the lawsuit alleges. The white tester also was advised to open a checking account if applying for a mortgage and was told the loan officer would be available after banking hours.

Two months later, on April 6, a Latina visited the branch for the same purpose. “Employee 1 said, ‘We really don’t have anything for you,’ but was cut off by Employee 2 who said he had a first-time home buyer brochure if she wanted to look at it,” the lawsuit alleges.

The brochure was for a special CHFA program and was not specific to Liberty Bank, the lawsuit alleges. The tester asked again for brochures but was “told that was it,” the lawsuit alleges.

The brochure had information about down payment assistance, and the tester was advised to call the loan officer for more information.

“We didn’t like what we saw,” Gentes said.

The fair housing center has asked the court to rule that Liberty has violated the Fair Housing Act, to stop employees from the discriminatory practices and to award unspecified monetary damages to the housing center.

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