Governor Cuomo Announces Findings of New York Investigation of Redlining in Buffalo – ny.gov

Following Governor Andrew M. Cuomo's 2021 State of the Stateproposalto increase homeownership rates in communities that have been adversely impacted by redlining, the Governor today announced the findings of a new report by the New York State Department of Financial Services on redlining in the Buffalo metropolitan area. Buffalo remains one of the most racially segregated cities in the United States decades after the practice of redlining and other forms of housing discrimination were banned by law. DFS' report found a distinct lack of lending by mortgage lenders, particularly non-depository lenders, continues today in Buffalo neighborhoods with majority-minority populations and to minority homebuyers in general.

Redlining includes such illegal practices as refusing to do business in a neighborhood based on the racial or ethnic composition of a neighborhood's population, or imposing more onerous terms on home loans in a particular neighborhood in a discriminatory manner. The population of the city of Buffalo is approximately 47 percent white, 36.7 percent Black, and 11.6 percent Hispanic or Latino, and the population of the metro area is approximately 77 percent white, 12 percent Black, and 5 percent Hispanic or Latino. According to a recent report, in the city of Buffalo, 85 percent of people who identify as Black live in neighborhoods east of Main Street, which is where areas that were redlined in the 1930s are located.

"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,"Governor Cuomo said. "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."

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."

The Buffalo market includes banks of all sizes, from large global banks to small local and community banks. The prominence of nonbank mortgage lenders focusing only on mortgage lending has increased significantly, with nonbank mortgage lenders originating 37 percent of mortgages in Buffalo between 2016 and 2019. Nationally, nonbank lenders have overtaken banks as the source of the majority of mortgages.

The DFS investigation analyzed Home Mortgage Disclosure Act data for Buffalo and surrounding areas.

Among other things, the DFS analysis found:

Report recommendations include:

These recommendations are timely and critical in light of the continued fight for racial, social and economic justice. Populations in historically redlined neighborhoods also continue to experience economic disadvantage including lack of access to quality financial services, more environmental hazards, lower life expectancy, and worse health outcomes than the overall population, which the COVID-19 crisis has further aggravated.

Settlement with Nonbank Lender

The Governor also announced that DFS settled with Hunt Mortgage Corporation, a nonbank mortgage lender. DFS' investigation found no evidence of intentional discrimination by Hunt Mortgage or a violation of fair lending laws. However, DFS found that weaknesses in Hunt Mortgage's fair lending and compliance programs and lack of sufficient attention to fair lending issues contributed to the company's poor performance in lending to people of color and in majority-minority neighborhoods. In a good faith effort, Hunt agreed to take significant steps to improve its service to the entire community, including the following:

DFS continues to investigate several other lenders and will announce findings as those cases are resolved.

To review the full report, including charts of lenders' performance, visit the DFS website.

To review the Hunt Mortgage settlement agreement visit the DFS website.

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Governor Cuomo Announces Findings of New York Investigation of Redlining in Buffalo - ny.gov