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Gov. Cuomo announces findings of New York State investigation into redlining in Buffalo

Andrew Cuomo
Posted at 4:55 PM, Feb 04, 2021
and last updated 2021-02-05 00:07:44-05

BUFFALO, N.Y. (WKBW) — New York Gov. Andrew Cuomo announces the findings of a New York State investigation into redlining in the City of the Buffalo.

According to a New York State Department of Financial Services report, investigators found that a distinct lack of lending by mortgage lenders continues in Buffalo neighborhoods with majority-minority populations and to minority home buyers.

The findings included the following

  • Only 9.74 percent of total loans made in the Buffalo region are made to minorities, less than half of what would be expected given that minorities are about 20 percent of the metro area's population
  • Nonbank mortgage lenders in the Buffalo market lent at lower rate in majority-minority neighborhoods than depository institutions did, despite the reverse being true statewide and nationally
  • Several of the nonbank mortgage lenders DFS investigated made little to no effort to do business in majority-minority neighborhoods, do not have adequate fair lending compliance programs, and do not track whether or how well they are serving populations of color.

"Underserved communities, especially families of color, continue to face housing discrimination, in the form of limited access to mortgage lending, facing a roadblock to achieve the American dream," Governor Cuomo said. "The report reaffirms the importance of the State of the State proposal to increase access to mortgage loans to close the racial wealth gap to help us build back better for a fairer New York."

Redlining began in the 1930s. It let banks discriminate by race and zip code, and has been illegal for decades. Kathryn Franco is the chair of Buffalo Niagara Community Reinvestment Coalition.

“We're still seeing the that the practice of redlining, although it's no longer red lines on a map, that it is still happening and it is quite pervasive,” Franco said.

According to the report, minorities make up about 20% of the Buffalo metro area, but less than 10% of loan borrowers. The report said that number alone can't indicate intentional redlining, but demonstrates a significant problem.

“We see our communities and neighborhoods, still reflecting the practices, these discriminatory practices, and these continued practices, no matter where you go in Buffalo you can make the difference," Franco said. "And I think that again, looking at that kind of West to East Side Main St. divide, really highlights how these practices impact people’s everyday lives.”

Buffalo Common Council President said he was disappointed by the report, but not surprised.

“We look at our neighborhoods all the time and continue to see disinvestment, and not because people don't want to invest in certain neighborhoods, but the difficulty that it is," Pridgen said. "I recently spoke to a gentlemen, whose wife is a principal, he works for a large company, and he’s African American, wanted to invest in a property that their parents left them on the East Side and has had one heck of a time for that to occur. So we see it all the time."

The report found nonbank lenders gave a smaller percentage of loans to minorities than banks gave. The report said several nonbank lenders made "little to no effort" to work in minority neighborhoods.

DFS investigated HUNT Mortgage Corporation and found a "lack of sufficient attention to fair lending issues" contributed to low levels of lending to minorities, and to buyers in majority-minority neighborhoods.

DFS found no evidence of intentional discrimination by HUNT Mortgage, and said the company agreed to take steps to improve.

The state outlined the steps:

  • Increasing marketing to people of color and within majority-minority neighborhoods;
  • Developing a special financing program that will provide $150,000 in discounted or subsidized financing on loans for properties located in majority-minority neighborhoods;
  • Providing annual fair lending training to Hunt Mortgage employees and agents with significant involvement in lending; and
  • Conducting an annual fair lending compliance audit.

"We appreciate the state's findings of no wrongdoing by HUNT Mortgage," said President Linda Mallia. "We, as an industry, should do everything possible to help every US citizen achieve the goal of homeownership. We see this as an opportunity to implement programs to strengthen our service within all of our communities, especially those that are underserved.

DFS said it is investigating multiple lenders and will share the findings as cases are resolved.

The report recommends a change in state legislation, so nonbank lenders would have to comply with the Community Reinvestment Act like banks do. The CRA requires banks to define their assessment areas, so they can be evaluated on whether they're fulfilling an obligation to serve the community in which they do business in.

The report also calls on the NYS Dept. of State to investigate real estate agents to determine their connection with nonbank lenders.

Franco said the work of grassroots organizations is also essential to the reform process.

“I hope that that’s what people still take away, that redlining is not an antiquated word. Maybe the practices don’t look the same, but it is still happening today in 2021,” Franco said.

The City of Buffalo is requesting a briefing on the findings from DFS. The city's full statement is below.

"The City is carefully reviewing the report and will request a briefing from DFS on its findings with the intent of enhancing strategies to improve home ownership opportunities for residents of color," said City of Buffalo spokesperson Mike DeGeorge. "The City’s Homegrown program, and other home ownership support and foreclosure prevention programs, are critical to supporting neighborhood stability and bolstering wealth generation among Black and other minority residents. We will continue to support these programs and work with our state and federal partners to hold mortgage lenders accountable and ensure fair lending practices across the City by non-bank mortgage lenders. In addition, we will pursue the development of new programs to increase home ownership for residents that have been historically and unfairly denied access."

You can read the full report by clicking here.