Middletown-based Liberty Bank is pledging more than $15 million to lend in underserved areas in order to settle prior claims of redlining.
The bank and the Connecticut Fair Housing Center, the organization that brought the suit forward, announced the settlement in a joint statement yesterday.
Under the agreement, Liberty Bank, while denying any wrongdoing, has committed to expand its Good Neighbor Mortgage Loan Program by $10 million.
The bank will also expand its community development loan program by $5 million over the next three years to further support community service, economic development and diverse affordable housing projects in underserved low- and moderate-income areas.
Liberty Bank Liberty has also set aside $300,000 for subsidies to promote home ownership and enhance access to credit in communities with a history of constrained credit. Lastly, the nearly $5.1 billion-asset bank will establish a new loan production office in Hartford and support this initiative by dedicating an additional $200,000 in grants for qualified organizations from these communities.
“The Connecticut Fair Housing Center is pleased to join Liberty Bank in announcing these important lending and community-building initiatives,” Erin Kemple, executive director of the Connecticut Fair Housing Center, said in a statement. “We applaud Liberty’s commitment of time, energy and resources to a wide range of programs that will help promote financial education, expand opportunities for access to credit and financially support programs developed to revitalize the housing market in communities in Connecticut that have traditionally had difficulty accessing credit.”
The Connecticut Fair Housing Center first filed its lawsuit in federal court in October of 2018, alleging that Liberty Bank discriminated against African American and Latino residential mortgage applicants. Liberty Bank is perhaps the only bank in Connecticut with a current African American CEO and president.
“They happen to be the worst [in Connecticut],” Jeff Gentes, managing attorney at the Connecticut Fair Housing Center, told The Commercial Record in October. “They are not the only one doing badly. We do this publicly, so we can have an effect beyond the one bank we sue.”
Specifically, the lawsuit alleged that during the application process, Liberty loan originators denied African American and Latino applications at significantly higher rates than those from white applicants. The lawsuit also states that only 3.34 percent of Liberty Bank’s total originations went to African Americans or Latino applicants between the years 2010 and 2016. The bank also failed to provide refinance loans to communities of color at a rate that outstrips its peers at a statistically significant level, according to the lawsuit.
The agreement between Connecticut Fair Housing Center and Liberty represents an innovative residential lending strategy that leverages the center’s research and expertise on barriers to homeownership for Connecticut residents and the bank’s unique lending programs, experienced residential lending personnel and extensive branch network.
“For nearly two centuries, Liberty Bank has been serving the banking and lending needs of communities across Connecticut,” Chandler J. Howard, president and CEO of Liberty Bank, said in a statement. “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.”
