Kept Out: Running Investigative Reporting Series on Housing and Lending Discrimination

[Dr. Acula]

Reveal news is doing a series on this topic and its especially relevant since the Trump Administration has gutted the CFPB of enforcement powers to go after lenders that discriminate based on race

see: Trump administration strips consumer watchdog office of enforcement powers in lending discrimination

Here is the first story from Reveal that covers the topic

8 lenders that aren’t serving people of color for home loans
Topics: Kept Out

By Aaron Glantz, Emmanuel Martinez and Jennifer Gollan / February 15, 2018

troubling pattern emerges: Nearly two-thirds of mortgage lenders denied home loans for people of color at higher rates than for white people. But among the 6,600 U.S. lenders, some stood out for particularly extreme practices.

Note: Unless otherwise specified, all figures below rely on publicly available Home Mortgage Disclosure Act data and reflect conventional home purchase lending in 2015 and 2016.

Big banks that turn away black and Latino homebuyers
Some of America’s biggest banks had the worst track records. Among banks that took in more than 10,000 conventional loan applications in 2015 and 2016, these two were the most likely to say no.

TD Bank – “America’s most convenient bank”
Headquarters: Cherry Hill, New Jersey

The skinny: African American and Latino borrowers are more likely to get turned down by TD Bank than by any other major mortgage lender. The bank turned down 54 percent of black homebuyers and 45 percent of Latino homebuyers, more than three times the industry averages.

The response: TD Bank declined to discuss its lending. Bank spokeswoman Judith Schmidt sent a statement saying the bank “makes credit decisions based on each customer’s credit profile, not on factors such as race and ethnicity.” It said an internal review of its lending patterns found that, after taking into account creditworthiness, its black and Latino applicants were no more likely to be denied loans than white applicants.

Capital One – “What’s in your wallet?”
Headquarters: McLean, Virginia

The skinny: Capital One exited the home mortgage market in 2017. In the years before, it took in a higher proportion of mortgage applications from people of color than most of its competitors. But when African Americans approached Capital One to buy a home, they were more likely to get turned down than get a loan. Latino applicants fared slightly better. They were rejected 31 percent of the time, the third-highest rate among major lenders.

The response: In an email, Capital One spokeswoman Tatiana Stead said the company “either exceeds or is in line with industry benchmarks” when it comes to serving people of color and minority neighborhoods. “We have and will continue (to) work to ensure that Capital One’s lending standards and our commitment to fair banking practices are maintained across all of our banking operations,” she said.

Major mortgage brokers exempt from the Community Reinvestment Act
The economic recovery has been marked by the rise of mortgage lenders, which unlike banks are not required to follow Community Reinvestment Act rules to lend to low-income borrowers and in blighted communities.

Ruoff Home Mortgage – “A great name to know when you need a mortgage”
Headquarters: Fort Wayne, Indiana

The skinny: Since the housing bust, family-owned Ruoff Home Mortgage has originated the most loans in Indiana and is one of the fastest-growing mortgage lenders in the country. Although its biggest market was Indianapolis, with a large African American community, the company made 92 percent of its 5,300 conventional home loans to whites in 2015 and 2016.

The response: A spokeswoman for the company did not respond to two emails and a voicemail requesting comment.

Citizens First Wholesale Mortgage Co. – “Your hometown wholesale lender”
Headquarters: Sumter County, Florida

The skinny: Located in The Villages, a retirement community halfway between Gainesville and Orlando, Citizens First is one of the largest lenders in America to cater almost exclusively to whites. Federal lending documents show 97 percent of the home loans it made in 2015 and 2016 were to whites.

The response: A Citizens First official did not respond to a voicemail and two emails requesting comment.

Smaller banks draw lines that exclude people of color
The Community Reinvestment Act allows banks to draw lines on maps to define “assessment areas,” where regulators should scrutinize their lending. Some of those that lend almost entirely to whites drew service areas that excluded neighborhoods where large numbers of people of color live.

First National Bank in Staunton – “Community banks care about their communities”
Headquarters: Staunton, Illinois

The skinny: The St. Louis metro area is racially diverse, home to more than 500,000 African Americans. But over two years, none of the 324 home loans made by First National Bank in Staunton went to an African American or Latino. All nine of its branches are in neighborhoods of the metro area that are at least 89 percent white. First National told regulators who enforce the Community Reinvestment Act that it intends to serve two overwhelmingly white counties in the St. Louis area, stopping at the county line of St. Clair County – home to East St. Louis, a predominantly black city.

The response: A First National official did not respond to two emails and a voicemail requesting comment.

First Federal Savings and Loan Association of Greene County – “People you know, the people you can trust!”
Headquarters: Waynesburg, Pennsylvania

The skinny: Like St. Louis, Pittsburgh is a racially diverse city with a large population of African Americans, but First Federal Savings and Loan doesn’t serve them. Its branches all are in majority-white neighborhoods. Of the 554 conventional mortgages it issued in 2015 and 2016, 99 percent went to whites. Like First National Bank in Staunton, Illinois, it crafted an assessment area under the Community Reinvestment Act that includes overwhelmingly white suburban and rural counties, but stops at the Allegheny County line, where large numbers of people of color live.

The response: In a letter to Reveal, the company’s president and chief executive, Judi Goodwin Tanner, said that wasn’t a problem: “While this statistic alone might certainly be used to attempt to cast First Federal in a negative light,” she said, federal regulators had found “no evidence of discriminatory or other illegal credit practices.” In her letter, Tanner stated that the county where the bank is headquartered is 94.8 percent white. It said the bank had approved nearly all nonwhite applicants who sought a residential mortgage.

Banks that already are in trouble
The Justice Department and U.S. Department of Housing and Urban Development rarely sue banks for redlining. Only a handful of cases were brought under President Barack Obama. None have been brought under President Donald Trump. These are two banks that had cases brought against them and the results.

KleinBank – “A foundation of integrity and trust”
Headquarters: Chaska, Minnesota

The skinny: A week before Obama left office, the Justice Department suedKleinBank, accusing it of unlawful redlining of majority-minority neighborhoods in the Minneapolis area. Federal lending data shows the bank made one loan to an African American and six to Latinos in 2015 and 2016, out of 585 total. In its lawsuit, the Justice Department cited KleinBank’s self-designated Community Reinvestment Act service area, a horseshoe around sections of the Twin Cities metro area where large numbers of people of color live. KleinBank is defending itself by citing its most recent satisfactory Community Reinvestment Act review from the federal Office of the Comptroller of the Currency.

The response: “My comments are already in the public domain and on the public record, so I’d suggest you follow those,” Doug Hile, the bank’s president and chief executive, said before hanging up the phone. In an interview with The New York Times last year, Hile said of the Justice Department suit: “We are just not going to accept the premise that we should have to admit to doing something wrong when we didn’t do something wrong.”

Associated Bank – “Bank of the Packers since 1919”
Headquarters: Green Bay, Wisconsin

The skinny: In May 2015, the U.S. Department of Housing and Urban Development reached a $200 million fair lending settlement with Associated Bank, a major regional holding company. The company’s two largest markets are the racially diverse cities of Chicago and Milwaukee, but in 2014, the year before its settlement with HUD, 92 percent of the company’s conventional mortgage loans went to whites. By the end of 2016, the bank had improved but still made 32 times as many loans to white homebuyers as African American ones. In Chicago, it had a whiter borrower profile than any major bank in the area.

The response: A spokeswoman for Associated Bank did not respond to a voicemail and two emails requesting comment.

 

[Dr. Acula]

Gentrification became low-income lending law’s unintended consequence
Gentrification became low-income lending law’s unintended consequence
By Aaron Glantz and Emmanuel Martinez / February 16, 2018
PHILADELPHIA – Jonathan Jacobs had almost no savings, a modest income and a credit report marred by a disputed cellphone bill. But he easily bought a newly renovated row house in Point Breeze, a South Philadelphia neighborhood that’s historically African American.

“It took about 15 minutes” to fill out the paperwork, the career counselor said. “Now I pay less to own a house than I did to rent an apartment. That’s the American dream.”

Jacobs, who is white, got a special home loan from New Jersey-based TD Bank that is designed to help low-income people and blighted neighborhoods, where banks are required to lend under the landmark Community Reinvestment Act of 1977. The law was designed to correct the damage of redlining, a now-illegal practice in which the government warned banks away from neighborhoods with high concentrations of immigrants and African Americans.

But the law didn’t anticipate a day when historically black neighborhoods would be sought out by young white homebuyers. So instead of lending to longtime black residents of Point Breeze, most of the loans there are going to white newcomers such as Jacobs.

The Community Reinvestment Act “is based on geography, so it’s perfectly possible to comply with CRA and have that pattern,” said Patricia McCoy, a law professor at Boston College who oversaw mortgage policy initiatives for the Consumer Financial Protection Bureau under President Barack Obama. “That’s not the idea, of course, but the law allows it.”

The result is nearly all financial institutions nationwide have passed their Community Reinvestment Act inspections since 2009, even though racial disparities in lending remain as pronounced as ever.

Reveal from The Center for Investigative Reporting analyzed 31 million mortgage records made available under the Home Mortgage Disclosure Act and found 61 metro areas across America where people of color – African Americans, Latinos, Asians and Native Americans – were denied conventional home purchase loans at significantly higher rates than whites. That was true even after controlling for nine economic and social factors, including applicants’ income, the size of the loan they sought and the neighborhood where they wanted to buy.

African Americans or Latinos were more likely to be turned away in major metropolitan areas such as Philadelphia, Detroit, Atlanta and Washington and smaller cities such as Iowa City, Iowa; Sumter, South Carolina; Tacoma, Washington; Vallejo, California; and Little Rock, Arkansas.

MODERN-DAY REDLINING


“We’re talking about the same issues in 2017 that we were talking about in the 1940s,” said Arlene Wayns-Thomas, president of the Philadelphia chapter of the National Association of Real Estate Brokers, which represents African American real estate professionals.

White newcomers get the edge
In Point Breeze, signs of gentrification abound. White homebuyers stretch at a new yoga studio and brunch at a Zagat-rated bistro where the grilled cheese costs $11.95 and includes shaved apples and quince membrillo.

On a Sunday morning in front of the yoga studio, Julia Bringhurst talks real estate with her friends. Bringhurst, 49, who is white, works as an employee benefits manager at Morgan, Lewis & Bockius LLP, one of the biggest law firms in the city. She bought a Point Breeze home in 2013, when gentrification there was just getting underway.

Hagana (left) and Callie Kim are both lawyers and owners of a new yoga studio in Point Breeze. They’re also landlords, scooping up several properties thanks to special low down payment loans. “It was easy,” Hagana Kim said.Credit: Sarah Blesener for Reveal

Banks meet their Community Reinvestment Act obligations by marketing affordable loan products to the neighborhood’s newcomers, who typically are able to get a conventional mortgage with a 3 percent down payment, compared with the industry’s gold standard of 20 percent.

Bringhurst said she made lenders compete for her business: “You kind of sit there and push them around a little bit.”

Chatting with her were the owners of the yoga studio, Callie and Hagana Kim. They’re both lawyers in their early 30s. Callie is white and from rural southern Illinois. She works at the same law firm as Bringhurst. Hagana is Asian.

The Kims moved to this neighborhood in 2015, buying a three-bedroom, three-bathroom brick row house with a special low down payment loan from Citizens Bank. It was such a good deal that they went on to become landlords, picking up four more properties, two with just a few thousand dollars down.

Hagana Kim said banks and mortgage brokers compete aggressively for their business.

“It was easy,” he said. “Once you have a little money, it’s really easy to make a lot more.”

Jonathan Jacobs’ bank, TD Bank, offers an even more attractive deal, waiving costly mortgage insurance requirements for low down payment loans. The bank’s Right Step loan, which is offered to meet its obligations under the Community Reinvestment Act, is available to anyone seeking to buy in a low-income neighborhood, regardless of how much money that person makes. But government data analyzed by Reveal – independently reviewed and confirmed by The Associated Press – shows black and Latino borrowers have a tougher time.

In the historically black neighborhood of Point Breeze in Philadelphia, financial institutions collectively put $154 million worth of home loans into the hands of white borrowers between 2012 and 2016.Credit: Sarah Blesener for Reveal

Government data shows TD Bank denied a larger percentage of African American and Latino applicants than any other big U.S. bank in 2015 and 2016. During that time, it turned away 54 percent of African Americans trying to buy homes and 45 percent of Latinos – far higher than the industry averages of 16 percent and 13 percent, respectively. In Philadelphia, TD Bank denied twice as many loan applications from African Americans as it made to them.

But none of that is mentioned in the bank’s most recent Community Reinvestment Act assessment, a 362-page document released by the Treasury Department’s Office of the Comptroller of the Currency in October 2016. The comptroller called TD Bank’s lending performance good in Philadelphia and rated it as high satisfactory for the whole country. In its review, the agency cited the kind of low down payment conventional loan Jacobs got as having a “positive impact” on its rating.

KEPT OUT

• READ: Gentrification became low-income lending law’s unintended consequence
• READ: 8 lenders that aren’t serving people of color for home loans
• LISTEN: The red line: Racial disparities in lending
• LEARN: How we did our analysis
• EXPLORE: Search for lending disparities where you live, or text LOAN to 202-873-8325 to Reveal. Standard text rates apply.
• READ: The full white paper

Thomas Curry, who oversaw TD Bank’s review as comptroller under Obama, wouldn’t comment on any particular bank. But he argued that the Community Reinvestment Act needs to be updated.

The current comptroller, Joseph Otting, declined to be interviewed. His office sent a statement: “The Comptroller is interested in modernizing the administration of CRA to ensure it continues to encourage depository institutions to lend to and meet the credit needs of the communities they serve,” it said.

The Trump administration has eased the standards banks must meet to pass a Community Reinvestment Act exam. Last week, Otting’s office met with representatives of the American Bankers Association, which is seeking to weaken the act.

TD Bank declined to discuss its lending. Instead, bank spokeswoman Judith Schmidt sent a statement saying the bank “makes credit decisions based on each customer’s credit profile, not on factors such as race and ethnicity.” It said an internal review of its lending patterns found that, after taking into account creditworthiness, its black and Latino applicants were no more likely to be denied loans than white applicants.

TD Bank also said it actively works “to provide financial education to a diverse population of consumers.” Its denial rate was based on prudent decision making, the company said, which has led to lower delinquency rates among its borrowers.

‘They’re trying to push us out’
Across the Philadelphia area, lenders made 10 times as many conventional home purchase loans to whites as African Americans, even though the two groups represent about the same share of the area’s population. Reveal’s analysis found banks and other mortgage lenders favored white borrowers even in the city’s majority-black neighborhoods.

The disparities were especially acute in Point Breeze. Collectively, financial institutions put $154 million worth of home loans into the hands of white borrowers there between 2012 and 2016, even as they denied nearly twice as many home loans to African Americans as they made in the neighborhood. This was true whether a black applicant wanted to buy a house, refinance an existing loan or take out a home equity line of credit.

“They’re trying to push us out,” said Adrienne Stokes, a 58-year-old black woman, who retired from a career as a bill collector and now works as a home health aide. She’s lived in her Point Breeze home for more than 20 years.

Outside Stokes’ door, the streets are full of concrete mixers and pickup trucks stacked with lumber for nearby condominium projects. The home two doors down, where a black family lived for three decades, has been demolished and is now a hole in the ground. A local developer, Ori Feibush, is building a three-story house with a roof deck.

But longtime residents such as Stokes haven’t been able to take advantage of the development and rising property values that come with it. Instead, they worry about losing their homes.

Some of Stokes’ windows are cracked, and the kitchen linoleum is peeling. In the basement, the sump pump backs up when it rains. The circuit breaker is hanging off the wall.

Adrienne Stokes, 58, a longtime resident of Philadelphia’s historically black Point Breeze neighborhood, was denied a home improvement loan at her local bank, Firstrust Savings Bank.Credit: Sarah Blesener for Reveal

In 2015, Stokes went to Firstrust Savings Bank, a local institution that operates the only bank branch the neighborhood, seeking a $30,000 home improvement loan to fix up her house.

Although she’d been steadily paying off her mortgage for decades and had about $200,000 in equity in her home at the time, the bank turned her down, citing a low credit score. Like other banks, Firstrust, which passed its most recent Community Reinvestment Act assessment in 2014, rarely lends to African Americans. From 2012 to 2016, it denied more conventional mortgage loans to black borrowers in Philadelphia than it made.

“This is how people lose their homes,” said Wayns-Thomas, the head of the black real estate brokers association’s local chapter. “First, they can’t fix the kitchen, and then it’s a leaky roof and then the electrical. Then the building inspector shows up, and you have to sell, and here comes the gentrification.”

 

[Dr. Acula]

Living in the past
Firstrust’s branch here dates back to the Great Depression. It was opened in 1934 at the corner of Point Breeze Avenue and Reed Street by a Hungarian Jewish immigrant – at a time when Jews often faced lending discrimination.

Inside, the bank’s marketing is an homage to its past. During an October visit, the lobby was dominated by a display of black-and-white photographs of the bank’s founding family. In it, white men in white shirts and ties with close-cropped hair stand next to women in long skirts. Mozart was on the wall, too, but there were no images of African Americans.

Adrienne Stokes (right) meets with Firstrust Savings Bank’s community banking manager Cheryl Power in Philadelphia. The bank denied her application for a $30,000 home improvement loan in 2015, citing a low credit score. She’d been steadily paying off her mortgage for decades and had about $200,000 in equity in her Point Breeze home at the time.Credit: Sarah Blesener for Reveal

“It looks like the family has accomplished something big, and they want to preserve that memory,” said Angela McIver, CEO of the Fair Housing Rights Center in Southeastern Pennsylvania. “There’s nothing wrong with that, but if you don’t see pictures of diverse groups, the underlying message that you’re sending to diverse people is ‘We don’t do business with you here.’ ”

Firstrust declined to comment. It is actively lending in the neighborhood, however. For example, it’s helping finance a 46-unit townhome project being orchestrated by Feibush, the developer who’s building the three-story home two doors from Stokes.

Point Breeze developer Ori Feibush is orchestrating a 46-unit townhome project that’s being funded by Firstrust Savings Bank – the same bank that denied more conventional mortgage loans to black borrowers in Philadelphia than it made between 2012 and 2016. Feibush dismissed concerns about racial disparities in lending, arguing that they must be caused by economic factors or credit scores.Credit: Sarah Blesener for Reveal

Feibush, 33, dismissed concerns about racial disparities in lending, arguing that they must be caused by economic factors or credit scores.

“Every major lending institution is lending in this neighborhood,” he said, standing near his electric BMW and his home, which takes up the space of three traditional row houses.

Because of the Community Reinvestment Act, “it’s arguably easier to get financing (in Point Breeze) than just a few blocks north in a more affluent community,” he said. Across the street from the 46-unit project, Feibush has another new development: 22 luxury homes, each with its own roof deck and parking spot.

A 1937 map from the federal Home Owners’ Loan Corporation shows Philadelphia’s Point Breeze neighborhood (labeled D18) colored red, marking it as “hazardous” for bank lending.Credit: Mapping Inequality at the University of Richmond Digital Scholarship Lab

Eighty years ago, Feibush, who is Jewish, might not have had such an easy time getting financing. In some Philadelphia neighborhoods, surveyors from the federal government warned banks away from lending in areas with large numbers of Jews, saying that “infiltration of Jewish into (the) area” had depressed values.

Then, in 1937, Point Breeze was deemed “hazardous” by the government. In his assessment, Jas Livezly of the Home Owners’ Loan Corporation cited “Negro encroachment.”

 

[Serious]

I was watching a segment on this earlier in the week. shyt was

This clip was telling:

I queued up the part.

 

[Dr. Acula]

I was watching a segment on this earlier in the week. shyt was

This clip was telling:

I queued up the part.

wow...

Its incredibly depressing because the only way to fix this is through some sort of government action with teeth that will make them suffer the consequences. We know for the next three years, god forbid hopefully not 7, that is not going to happen if not actions are going to be taken to make it easier.

There is an entire system in place to ensure that the racial caste system is maintained in the current order. I mean its not new but its fukking disgusting to see it play out in the most blatant of ways which is different than knowing it happens in the abstract. The girl was like "yeah my financial situation is complete shyt and I rely on my black girlfriend with financial help" and they were like "No worries, here is your loan "

The solution is to build up black wealth through black banks and other means but that requires the ability to acquire capital in the first place and there is a system to make economic mobility on a widescale very difficult

 

[Dr. Acula]

Podcast episode covering the stories

The red line: Racial disparities in lending

 

[Serious]

wow...

Its incredibly depressing because the only way to fix this is through some sort of government action with teeth that will make them suffer the consequences. We know for the next three years, god forbid hopefully not 7, that is not going to happen if not actions are going to be taken to make it easier.

There is an entire system in place to ensure that the racial caste system is maintained in the current order. I mean its not new but its fukking disgusting to see it play out in the most blatant of ways which is different than knowing it happens in the abstract. The girl was like "yeah my financial situation is complete shyt and I rely on my black girlfriend with financial help" and they were like "No worries, here is your loan "

The solution is to build up black wealth through black banks and other means but that requires the ability to acquire capital in the first place and there is a system to make economic mobility on a widescale very difficult

Yeah man the icing on the cake, is that she's has a Ph. D in Computer Science, and is a professor up street at University of Penn.

I mean

This is something that I'm genuinely interested on a policy level. Systematic oppression is a major causation of disparities through minority communities(black), because we know that access to resources and where you live matters dictates health outcomes, potential earnings and quality of life...

What's even more shocking to me, is that this clip was in Philly, and Philly has a decent size black population. And within that black population there's a lot of professionals who are high income earners...

 

[VICVALLIN]

i read an article about this earlier today. its just as bad when it comes to car loans:

King: Toyota caught with racist interest rate practices

 

[Serious]

i read an article about this earlier today. its just as bad when it comes to car loans:

King: Toyota caught with racist interest rate practices

amazing. It just never stops....

 

[tru_m.a.c]

Clutch thread

 

[Mr swag]

i read an article about this earlier today. its just as bad when it comes to car loans:

King: Toyota caught with racist interest rate practices

This is why I buy cars with interest free plans. You save money if you are not white

 

[Dr. Acula]

The last article I was going to post is too long. Its the very first one at the top of the page.

Reveal

 

[hashmander]

i hope tim scott's bill gets the support and is passed because i would love to see credit data analyzed. that's the key aspect missing from these stories.

my parents drummed into my head that i need to keep my credit pristine and not to be afraid of credit because it's a great thing if used wisely. just based on my friends too many of them are afraid of credit, they think it's a bad thing. but not using it wisely just lessens your financial profile no matter how good your job is. my score fluctuates between 800-820 depending on activity. the only thing i pay interest on is my mortgage and that's 3.8%. all my big ticket credit related purchases from home improvement to furniture is 0% from 12-48 months. if i decided to stop leasing and wanted to buy i could get 36-72 months interest free with any car dealership. i don't pay for anything expensive up front because i would rather my money be elsewhere earning. need a new garage door? i applied for a new credit card that was offering a $500 cash bonus (some offer 50k points) for spending $3K etc in the first 3 months of opening the card and 15 months 0% intro period. some cards offer $150 for as little as $500 spent in first 3 months.

so if i spend $3000 on the new garage door even though i have money stashed away that could pay for it up front i will choose to pay that over a period of 15 months and get a $500 statement credit (thus actually dropping the original debt to $2500, so i will pay $166 a month for 15 mos. so while my money is working elsewhere, i'm improving my credit profile at the same time. 100% win for me.

my travel card is a chase sapphire reserve that i earn 3x points on travel and dining and a $300 annual travel credit (and initially got 100k points). i use my costco anywhere visa card (use to be an amex) for costco purchases, costco gas, etc and pay the balance off each month. i use my amex blue cash preferred at regular grocery stores and get 6% cashback. my checking acct is largely there to make bill payments and not debit card purchases.

without good credit in this country you're gonna get fukked. the better your credit the more of your own money you keep and everybody wants to give you interest free loans. while those who are struggling and could use some interest free in their life don't qualify.

 

[hashmander]

the next credit finesse i want to do is pay my mortgage off on one of those 0% intro deals and then when the 15 months is up move the remaining balance to another card for 15 months and so forth until it's $0. it's called credit card arbitrage. my balance isn't low enough yet though.

my parents bought a rental property in 2009 for like $60k doing that. they paid for the house with a credit card balance transfer check and did the 0% moving around until they recently paid it off.

 

[hashmander]

so my score went down a little bit with the january 21st update.