October 4, 2018

Lawsuit alleges discriminatory lending practices by Liberty Bank

HBJ Photo | Joe Cooper
HBJ Photo | Joe Cooper
Liberty Bank’s new Middletown headquarters at 245 Long Hill Road.

The Connecticut Fair Housing Center and the National Consumer Law Center on Thursday filed a lawsuit against Middletown-based Liberty Bank, accusing the community lender of violating federal laws by allegedly denying at higher rates or not providing adequate mortgage lending-services to consumers living in African-American or Latino neighborhoods.

The lawsuit filed in U.S. District Court for the District of Connecticut alleges that the bank has violated the Fair Housing Act by engaging in unlawful "redlining" of predominantly African-American and Latino neighborhoods in the greater Hartford and New Haven metropolitan areas.

"Redlining" is the discriminatory practice by banks or other financial institutions of denying or avoiding providing credit services to consumers because of the racial or ethnic demographics of their neighborhoods, the Housing Center said.

According to the lawsuit, Liberty Bank is accused of structuring its residential mortgage lending business to avoid serving the credit needs of individuals in areas predominantly occupied by African-American or Latino populations.

For example, only 3.34 percent of Liberty Bank's total mortgage originations (including refinacings) from 2010 to 2016 were to African-American and Latino applicants, the suit said.

The lawsuit says the bank strategically positioned branch offices and mortgage loan offices in areas of majority-white neighborhoods and have treated prospective loan applicants differently based on race or ethnicity.

The Connecticut Fair Housing Center and the National Consumer Law Center each said they did not warn Liberty Bank of their research findings or investigation before filing the lawsuit, as efforts to rectify similar discriminatory lending practices often fail.

Jeff Gentes, an attorney for the Connecticut Fair Housing Center, said the organizations are hoping other mortgage lenders in Connecticut see the lawsuit as a warning to improve their own practices.

"We looked at the top 26 lenders in the state and other lenders have work to do," Gentes said. "Liberty Bank happened to be the worst."

Liberty Bank could not be reached for immediate comment Thursday.

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