Liberty Bank has agreed to infuse $10 million into a mortgage program for low- and moderate-income communities as part of a settlement to resolve claims in a federal lawsuit alleging it engaged in systematic racial discrimination.
As part of the settlement announced Monday between the Connecticut-based bank, the National Consumer Law Center and the Connecticut Fair Housing Center, the bank also agreed to put $5 million into its community development loan program; to set aside $300,000 to promote homeownership in neighborhoods where it can be hard to get a mortgage; and to support an initiative making available $200,000 in grants for qualified organizations in low- and moderate-income communities. The bank also agreed to follow all fair housing laws and to train all mortgage lender personnel.
In October, the law center and the fair housing center sued the bank, which as part of the settlement does not admit any wrongdoing. The lawsuit said the bank, which is headquartered in Middletown and has 58 branches, engaged in “unlawful redlining to restrict residential mortgage lending from communities where most residents are individuals of racial and ethnic minorities.” It alleged the bank was discriminating against African-American and Hispanic residential mortgage applicants by denying their applications at significantly higher rates than white applicants’. Redlining is the practice of denying services, either directly or selectively raising prices, to residents of certain areas based on the racial or ethnic makeups of those areas.
The fair housing center conducted a two-year investigation of the bank and found that white and minority testers with the same financial background and credit were treated differently, according to the lawsuit. In one case, a black tester was quoted with higher closing costs in comparison with her white counterpart.
In a press release Monday, Liberty’s president and CEO, Chandler Howard, said: “As the oldest bank in the state, we know the importance of relationships, and not just in the communities where we are located, but also in the areas where we aspire to grow. … At Liberty Bank, we are deeply committed to helping people achieve their dreams of homeownership.”
Erin Kemple, executive director of the fair housing center, told the Connecticut Law Tribune Monday, “We are extremely happy. This means more than $15 million will be invested in … communities of color in Connecticut.”
Kemple said both sides agreed in late 2018 “that it was in the best interest of the communities we serve to discuss coming up with a solution that helped those communities.”
Representing Liberty were Joseph Meaney Jr. of Hartford’s Cranmore, FitzGerald & Meaney; and Matthew Previn and Andrea Mitchell, both of Buckley law firm. Meaney declined to comment Monday while Previn and Mitchell did not respond to requests for comment.
In court filings, the bank said the plaintiff’s claims should be barred, in whole or in part, because not doing so would result in unjust enrichment for the plaintiffs. It also argued that the plaintiff was not an aggrieved person under the Fair Housing Act; and claimed that ”race-neutral, objective, substantial and legitimate business rationales” supported the bank’s actions.
Representing the Connecticut Fair Housing Center were Jeffrey Gentes, Greg Kirschner and David Lavery, while Stuart Rossman and Jeremiah Battle were counsel for the National Consumer Law Center.