A Southington branch was one of several Liberty Bank offices tested as part of a federal lawsuit alleging widespread lending discrimination and redlining, an attorney for the plaintiffs, the Connecticut Fair Housing Center Inc. and the National Consumer Law Center, confirmed this week.
The two organizations filed the lawsuit this month against the Middletown-based bank, claiming it routinely discriminated against blacks and Hispanics in mortgage lending.
It further alleged Liberty Bank violated the Fair Housing Act by engaging in a pattern of redlining to restrict residential mortgage lending from communities where most residents are minorities.
The center found “that Liberty Bank had the widest racial lending disparities in refinance denials for African-American and Latinx applicants compared with white applicants, and it failed to provide refinance loans to communities of color at a rate that outstrips its peers,” according to the federal lawsuit.
The Fair Housing Center also said Liberty Bank engaged in gerrymandering its service areas to include majority-white neighborhoods in the greater Hartford and greater New Haven areas.
Liberty Bank is reviewing the lawsuit.
“Liberty Bank takes all allegations with regards to the bank, its practices and the treatment of customers very seriously,” Executive Vice President and Chief Marketing Officer Patricia Jatkevicius said in an e-mail. “We are actively looking into the matter raised by the Connecticut Fair Housing Center and National Consumer Law Center.”
An investigation by the Connecticut Fair Housing Center revealed that, going back to at least 2010, Liberty Bank has originated a significantly lower percentage of residential mortgage loans for properties in neighborhoods of color when compared with similar lenders.
According to the lawsuit, the Connecticut Fair Housing Center sent “testers” into various branches. The testers were black and white actors assigned similar credit scores and other financial variables under the guise of seeking home mortgages. In some cases, the black testers were given higher credit scores and finances.
The lawsuit cites testers who inquired about homes in the Plantsville section of Southington. The suit doesn’t include the specific branch location, but Jeff Gents, an attorney representing the fair housing center, said Wednesday that a Liberty Bank branch in Southington was among several branches covered in the lawsuit.
The center sent an African-American tester to meet with a loan officer to discuss homes in Plantsville in December 2016. A white tester met with the same loan tester in January 2017. The loan officer suggested a down payment for the white tester of 3 percent, while suggesting a 5 percent down payment for the black tester.
Among other disparities, the lawsuit claims the loan officer made two efforts to steer the African-American tester to purchase property in Bristol instead of a chosen home in Southington, according to the lawsuit.
The loan officer first suggested a discount loan program he knew the African-American tester wasn’t eligible for. He later suggested to the African-American tester that taxes were lower in Bristol — a falsehood. The loan officer made no effort to steer the white tester to any other municipality, according to the lawsuit.
“The loan officer used several derogatory phrases in front of the African-American tester,” the lawsuit states. “Seconds after meeting the African-American tester, he asked ‘how many of them are you?’ The loan officer did not ask the white tester any questions about family size. The loan officer also referred twice to the African-American tester’s husband as her ‘hubby’ although he only referred to the white tester’s spouse as ‘husband.’ ”
When the African-American tester started to take notes, the loan officer told her she was not allowed to take notes until he told her to write things down. The loan officer permitted the white tester to take notes at will.
Five other tests with Latina and African-American testers at branches in Cromwell, Glastonbury, Middletown, and Wethersfield, yielded similar results. Loan officers and bank employees offered more assistance to white testers than to the minority testers, according to the suit.
“Redlining systematically denies people who live in neighborhoods of color access to homeownership, therefore denying them the opportunity to build wealth,” said Connecticut Fair Housing Center Executive Director Erin Kemple. “Unfortunately, 50 years after the passage of the Fair Housing Act, the practice continues. Liberty Bank is choosing to offer less assistance to communities of color in violation of the state and federal fair housing laws.”