Five Star Bank reached an agreement with New York Attorney General Eric Schneiderman on Monday to change its business practices after the bank allegedly discriminated against predominately minority neighborhoods in the Rochester area.
The bank allegedly excluded minority neighborhoods from its mortgage lending program from 2009 to September 2013 by refusing to give loans of less than $75,000 in seven of its 12 lending packages. This would effectively discourage borrowers in minority neighborhoods because most of the homes in these areas were priced below $75,000.
“All New Yorkers, regardless of the color of their skin or the racial composition of their neighborhood, must be afforded an equal opportunity to obtain credit,” Schneiderman said. “My office will continue to fight for equal justice under law for all New Yorkers and to ensure that lenders treat people fairly in the marketplace. It's truly disheartening that in 2015, we are still confronting the systematic racial discrimination that has persisted throughout our nation's history.”
As part of the settlement, the bank will be required to open two new branches in predominately minority areas of Rochester. In addition, the bank will also be required to give $500,000 in subsidies or discounts on loans as part of a special financing program the bank has to create. It must also develop a marketing program and spend $250,000 on advertising targeted toward minority areas.
“It is critical that banks fulfill their legal obligations to make sure they are not excluding home buyers from the ability to shop for and obtain financing simply because they want to purchase homes in communities of color,” Bryan Hetherington, chief counsel of the Emprie Justice Center in Rochester, said. “We are pleased to see that the attorney general’s settlement ensures that Five Star Bank will be serving all of Monroe County’s communities.”