Liberty Bank Settles in Lawsuit Alleging Discriminatory Lending

Liberty Bank Settles in Lawsuit Alleging Discriminatory Lending

Liberty Bank, based in Middletown, CT, has agreed to invest millions to make banking services and loans more available to people of color after settling a lawsuit that alleged the Middletown-based company was discriminating against minorities.  The agreement comes after the Connecticut Fair Housing Center and the National Consumer Law Center last fall filed a lawsuit alleging the bank violated the Fair Housing Act by “redlining” — denying to provide or avoiding giving credit to borrowers because of the racial or ethnic demographics of the their neighborhoods.

According to the settlement, Liberty Bank denied loan applications from “African-American and Latinx borrowers at a rate two to three times that of white borrowers,” between 2010 and 2016.  Further, the company allegedly concentrated investment in heavily white areas, drawing assessment areas under the Community Reinvestment Act (CRA) that largely excluded majority-minority communities.

Under the agreement announced Monday, Liberty Bank will expand its Good Neighbor Mortgage Loan Program, making an additional $10 million available to borrowers at below-market mortgage rates. In addition, it will set aside $300,000 in subsidies to promote home ownership and access to credit in neighborhoods where it has been difficult to secure a mortgage; and the bank pledged to open a new loan production office in Hartford.

In addition to the boost in home lending, Liberty Bank will expand its community development loan program by $5 million over the next three years to promote community service, economic development and affordable housing projects in low- and moderate income neighborhoods.

Liberty Bank did not admit wrongdoing in the settlement agreement. As described, the parties entered into the settlement to “resolve voluntarily any and all claims asserted by CFHC in order to avoid the risks and burdens of litigation.”

In the settlement, Liberty Bank reaffirmed “its continuing commitment to meeting the credit needs of persons in its CRA Assessment Areas including residents located in low and moderate income (“LMI”) and majority-minority census tracts (“MMCT”).”

March 8th, 2019|