NYS releases findings of investigation into redlining in Buffalo

Erie County

BUFFALO, N.Y. (WIVB) — Gov. Andrew Cuomo’s office has released the results of a state investigation into redlining in Buffalo. According to the Department of Financial Services’ report, there has been a significant lack of lending in majority-minority neighborhoods, and to homebuyers of color, even after redlining was banned decades ago.

“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,” Cuomo said in a written statement. “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.” 

Cuomo’s office says the population of Buffalo is approximately 47% white, 36.7% Black, and 11.6% Hispanic or Latino.

The metropolitan area is 77% white, 12% Black, and 5% Hispanic or Latino.

A recent report cited by the state says 85% of people who identify as Black live in neighborhoods east of Main Street. This is where the areas that were redlined in the 1930s are located.

Here are some of the other findings in the Department of Financial Services report:

• Between 2016 and 2019, non-bank mortgage lenders originated 37 percent of mortgages in Buffalo.

• “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.”

Quoted sections from Press Office of New York State Governor Andrew Cuomo

Superintendent of Financial Services Linda A. Lacewell said, “The findings of this report are particularly troubling. Homeownership is a critical path to building wealth and economic stability, and the data is clear – families of color, particularly African Americans, do not have equal access to mortgage lending in Buffalo compared to white households. We now have the opportunity to right some of the wrongs of the past by looking at the entire problem and formulating solutions so the legacies of segregationist policies do not continue into the future.”

Here are the state’s recommendations:

State Legislative Action: The state Community Reinvestment Act does not cover nonbank mortgage lenders; only banks must comply with its requirements. Applying the CRA to non-depository mortgage lenders would be an important step in addressing fair lending abuses in the New York residential loan market. This is increasingly important as nonbank mortgage lenders now make a majority of loans nationwide. Accordingly, the Department recommends New York State Banking Law § 28-b, the State’s CRA (which largely mirrors the federal CRA), be amended to apply to nonbank mortgage lenders.”

Federal Government Action: The report calls on federal agencies, the U.S. Office of Comptroller of the Currency and the U.S. Consumer Financial Protection Bureau, to examine federally regulated institutions, state and federal, to investigate whether fair lending violations are occurring at Buffalo institutions that appear to be performing poorly based on statistical measures. The Department’s own jurisdiction in this area is limited to state-chartered banks and credit unions and DFS-licensed non-depository mortgage lenders.”

Referral to New York State Department of State: The report recommends DOS conduct an investigation of real estate agents that several nonbank lenders largely relied on for business so as to determine their role.”

Press Office of New York State Governor Andrew Cuomo

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