After Review, Premium Mortgage Pledges to Increase Loans to People of Color | New

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A Rochester-based mortgage lender pledged to invest $ 500,000 in lending incentives for homebuyers in historically disadvantaged communities in upstate New York after being scrutinized for its lending models by state regulators.

Premium Mortgage’s move follows a report by the state’s Department of Financial Services on mortgage lending practices in the Buffalo area that cited Premium and other lenders for “gross shortage of loans” to people of color and in neighborhoods mainly populated by them.

The report, which was released in February, found that while around 20% of the region’s population is made up of people of color, minority mortgages accounted for less than 10% of total mortgages in the region between 2016. and 2019.

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  • PHOTO BY DAVID ANDREATTA
  • Premium Mortgage offices on Monroe Avenue in Brighton.

Focusing on census tracts that the department considered to be “majority-minority,” regulators found that about 4.5% of loans came from those areas. Of the 4,841 mortgages provided by Premium, approximately 3.9% came from majority minority land. In contrast, Evans Bank and Five Star Bank issued more than 12% of their loans in these leaflets.

The investigation found no sign that Premium or any other institution discriminated against borrowers. Loan applications were not turned down at excessive rates and, in fact, approval rates were high for minority applicants, according to the report.

But, the department said, “these companies had little or no engagement with minorities and generally made little effort to do so.”

The investigation focused in part on the performance of several “non-depository lenders” operating in the Buffalo metro, including Premium. Non-depository lenders typically focus on mortgages and do not offer other financial products, such as savings accounts and checking accounts, like banks.

The Financial Services Department report indicates that these institutions account for a growing share of mortgages nationwide. In 2013, banks issued 70 percent of new mortgages, while “non-banks” now lend the majority of mortgages, which they often sell in the secondary market, according to the report.

The report noted that the ministry’s investigation of a non-bank lender, Hunt Mortgage Corp., concluded and the ministry found no intentional discrimination or violation of fair loan laws.

But in a “good faith attempt to increase lending to majority-minority neighborhoods and to minority borrowers,” Hunt reached an agreement with the Department of Financial Services to improve its services, the report said.

Under the deal, Hunt will increase marketing to minorities and majority minority neighborhoods, commit to creating a financing program that will provide at least $ 150,000 in reduced or subsidized loans for homes in majority minority neighborhoods. , and will train its employees and agents every year. on fair loans.

This agreement appears to have been a model for the one Premium struck with the Department of Financial Services.

In a June 28 statement announcing the deal, Premium executives noted that the department had completed its investigation into the company and found no evidence of intentional discrimination, misconduct or other violations.

But, executives said, Premium chose to enter into an agreement with the department to launch the new Neighborhood Vitality $ 500,000 purchase incentive program.

“We didn’t just want to throw money at the problem – it’s easy, anyone can do it,” Premium Mortgage president Mike Donoghue said in the statement. “We wanted to find a way to put the money in the hands of those who need it and be able to use it to revitalize their neighborhoods.”

National Mortgage News, a trade publication, reported that Premium will advertise the Neighborhood Vitality program and disperse funding using proprietary software that identifies underserved communities in upstate New York.

In its press release, Premium said it launched the Neighborhood Vitality program earlier this year, while it was still under review, and has already distributed $ 100,000 in incentives.

Jeremy Moule is the editor-in-chief of CITY. He can be contacted at [email protected]

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