A new government report breaks down the percentage of loans Long Island mortgage lenders made to minority borrowers as part of the state’s effort to address housing discrimination.
The report, authored by the state Department of Financial Services, covers Long Island lenders, as well as those in Rochester and Syracuse, and uses federal data on home loans made to non-white individuals and to borrowers purchasing homes in majority-minority census tracts.
On Long Island, non-white individuals represented a greater share of the loan applicants than they did of loan recipients in both counties.
In Nassau, non-white people applied for 37.9% of the 267,000 applications analyzed by DFS from 2016 to 2021. Among the roughly 161,000 loans that were originated, non-white borrowers represented 35.3%.
WHAT TO KNOW
- State officials analyzed home loans made to non-white individuals and to borrowers buying homes in majority-minority census tracts on Long Island, as well as in Rochester and Syracuse.
- No fair lending law violations were found, but the analysis led the Department of Financial Services to investigate several lenders on Long Island and those investigations are ongoing.
- Assuring equal access to home ownership is the goal behind this report and other state actions, officials said.
DFS noted non-white people make up 41.8% of Nassau County residents.
In Suffolk County, non-white applicants made up 24.7% of applicants across 320,000 applications. Those borrowers received 22.4% of the 199,000 loans that were originated. The population in Suffolk is 33.7% non-white.
The report aimed to gather information from lenders to determine possible instances of redlining, a practice in which lenders refuse to lend to non-white individuals for homes in particular neighborhoods, avoid making loans in certain areas based on the area's racial makeup or impose onerous terms for home purchases in certain neighborhoods for discriminatory reasons, according to the department. The term comes from the government's use of color-coded maps based on the racial makeup of neighborhoods to make lending decisions for homeownership programs starting in the 1930s.
DFS said its analysis, which covered about three-quarters of home loans, led it to investigate several lenders on Long Island and those inquiries are ongoing. It also plans to expand oversight of non-depository mortgage lenders around the state. The report did not address the reasons why applicants were not approved or make specific allegations of discrimination against non-white borrowers.
"This report sheds a light on the barriers that communities of color, who have historically faced discrimination when seeking a mortgage, continue to face when it comes to making the dream of homeownership a reality," Gov. Kathy Hochul said in a statement.
The report also showed the percentage of loans that lenders made to people buying in areas where the majority of people are non-white or white and of Hispanic or Latino origin. In Nassau, about 20.5% of applications came from those areas, but 17.7% of loans originated went to borrowers buying in those areas from 2017 to 2021.
In Suffolk, about 37.9% of applications came from people buying in majority-minority areas. Lenders made 35.3% of their loans for purchases in those areas.
DFS said it investigated two upstate lenders, 1st Priority Mortgage in Williamsville and Premium Mortgage in Rochester, which it said made significantly fewer loans in majority-minority areas from 2016 to 2019 than other lenders in Buffalo and Rochester. It ultimately found neither lender violated fair lending laws. DFS reached agreements with the lenders last year requiring they improve community outreach, provide fair lending training to employees and extend financial assistance for borrowers in majority-minority communities. That followed an agreement last year with Hunt Mortgage in Buffalo.
“I am committed to ensuring that all lenders serve their entire community, because equal access to affordable credit is a key not just to homeownership, but to developing generational wealth and truly addressing inequality,” said Adrienne A. Harris, the department’s superintendent.
The investigation is one of several recent government efforts to address discrimination people face when buying or selling a home. Hochul and state Attorney General Letitia James announced a settlement in August with three real estate brokerages whose agents had been accused of illegal housing discrimination. The settlement built upon reporting in Newsday’s Long Island Divided investigation into unequal treatment in the real estate industry.
In March, the White House announced a plan to combat racial and ethnic discrimination in the appraisal of home values.
Ian Wilder, executive director of Long Island Housing Services in Bohemia, which conducts fair housing investigations, said the report presents an opportunity for lenders to meet the credit needs of people who aren’t being served. Local municipalities should look at the data on which banks are serving their communities when deciding where to do business, he said.
“This should be a wake-up call — even for the industry players who aren’t being contacted by DFS because their numbers are so grossly out of line,” Wilder said. Lenders “should be looking at their marketing plans or outreach … and looking for best practices to say, ‘What is it we need to do to serve our entire community?’”