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M&T settles lawsuit with Fair Housing Justice Center

M&T Bank Corp. will pay $485,000 and change some of its lending practices under a settlement with the New York City-based Fair Housing Justice Center.

The FHJC filed suit against M&T in February, accusing the bank of discrimination in mortgage lending practices on the basis of race and national origin. The bank defended its lending practices.

M&T will pay $485,000 to the plaintiffs for damages and attorney’s fees under the settlement, which was signed by U.S. District Judge Katherine D. Forrest.

The FHJC filed the suit after conducting an investigation in 2013 and 2014. The center used nine women – a combination of white, African-American, Hispanic and South Asian individuals – who posed as married first-time homebuyers when visiting an M&T loan office on Park Avenue in Manhattan. The nine “testers” were also plaintiffs in the suit.

The FHJC said its investigation focused on an M&T program called “Get Started,” which the bank promoted as featuring a low down payment and the ability to finance closing costs.

The center claimed minority borrowers were often steered into minority neighborhoods through the program. The FHJC contended that loan officers often encouraged minority testers to use “Get Started” to buy their first home but that white testers were “often not told about the program or were overtly discouraged from using it.”

Under the settlement, M&T agreed to not use neighborhood racial criteria in any of its residential mortgage programs. M&T will also adopt a bank-wide policy against steering between loan products and geographic areas based on race or national origin, and post its revised fair lending policy on its website. Additionally, the bank will use a consultant to review and recommend revisions to the bank’s fair lending training curriculum.

The bank said of the settlement: “M&T is pleased to have reached an amicable resolution of this matter with the Fair Housing Justice Center and looks forward to working with the FHJC going forward to ensure the bank continues to maintain a fair lending program that exceeds industry standards.” M&T also said it is “deeply committed to fair housing and fair lending,” noting it received “the highest possible rating from its regulators in Community Reinvestment Act compliance since 1989.”

Fred Freiberg, executive director of the center, said all lenders “should understand that compliance with fair housing and fair lending laws goes beyond Community Reinvestment Act ratings and approvals by regulators.”

“Lending institutions must also ensure that individual consumers are being treated in a fair and equal manner without regard to race or national origin, including at the pre-application stage of a mortgage lending transaction,” he said in a statement.