A civil rights organization has filed a federal lawsuit against Ulster Savings Bank, alleging discriminatory mortgage lending practices.
The non-profit Fair Housing Justice Center and three African American testers filed a lawsuit in federal court alleging that Kingston-based Ulster Savings Bank discriminates in its home mortgage lending practices on the basis of race. A two-year testing investigation conducted by the Fair Housing Justice Center involved sending African American and white testers to multiple Ulster Savings Bank loan offices. The investigation alleges that loan officers repeatedly recommended lower home prices and loan amounts and less favorable terms for African Americans who presented better qualifications than the white testers. The tests that turned up this alleged disparity occurred at the bank’s offices in White Plains, Goshen, Poughkeepsie and Riverhead, in Suffolk County. Katie Garcia is spokeswoman for the Fair Housing Justice Center.
“This was part of a larger systemic investigation that we initiated to look at the issue of how consumers of different races and national origins are treated by area lenders at the pre-application stage of a mortgage lending transaction,” Garcia says. “And what I can say more generally is that we conduct testing investigations frequently.”
Ulster Savings Bank President and CEO Bill Calderara says he takes the allegations very seriously, noting he did not receive any communication from the Fair Housing Justice Center prior to the lawsuit. Garcia declined to comment on whether this is usual as the subject of prior communication is not part of the complaint. Craig Gurian is executive director of the New York City-based Anti-Discrimination Center.
“The testing evidence in the case is just staggering how time after time African American testers who had as good or better qualifications were treated less well than white testers that went to various branches of the bank. So it reflects a serious problem and the Hudson Valley is not exempt from this kind of discrimination,” Gurian says. “And, in fact, the housing patterns that continue to exist in the Hudson Valley, which are characterized by deep racial segregation, are a continuing phenomenon that is contributed to, in part, by just this kind of discrimination.”
Calderara says he is proud of the service provided customers during the time he has been with the bank and the alleged discrimination sounds uncharacteristic. Again, Garcia.
“So this example is a classic example of how bias can affect mortgage-lending processes at the pre-application stage,” says Garcia. “While this case does not in any way suggest that all lenders are engaged in discriminatory practices, we also know that it’s not an aberration, that lending discrimination does still occur.”
The investigation found that in the Goshen office, the loan officer allegedly suggested the African American tester search for a home in areas with higher minority populations. This, says the Anti-Discrimination Center’s Gurian, is known as steering.
“It’s no longer the case, most of the time, that people just get the door slammed in their face.," says Gurian. "So the subtler kind of discrimination is when you’re steered to a place of minority concentration or steered away from a place that’s overwhelmingly white where you’re given terms that have a higher interest rate or you’re told you can’t afford as much as you can afford.”
The lawsuit alleges that the loan officers in the White Plains and Poughkeepsie offices told the African American testers that they could afford homes some $100,000 less than the white testers, while in the Poughkeepsie office, that figure was $200,000 less. Garcia says the African American testers had higher incomes, more assets, less debt and better credit scores than the white testers. Garcia says the Fair Housing Justice Center is not involved in any other such cases in the Hudson Valley at this time.
