Evans Bancorp Inc. (NYSEMKT:EVBN) is accused by New York attorney general Eric T. Schneiderman of denying mortgages to African-Americans regardless of their credit.
However, the bank maintains that the allegations are without any merit.
In a lawsuit anticipated to be filed in the U.S. District Court of Western New York, the State Lawyer Common’s Workplace is suing Evans Bancorp, accusing Evans Bank’s parent enterprise of redlining on Buffalo’s East Side. The regional lender’s business in the Buffalo area dates to 1920.
Michael Mauboussin: Challenges and Opportunities in Active Management And Using BAIT #MICUS
Michael Mauboussin's notes from his presentation at the 2020 Morningstar Investment Conference, held on September 16th and 17th. Q2 2020 hedge fund letters, conferences and more Michael Mauboussin: Challenges and Opportunities in Active Management Michael Mauboussin is Head of Consilient Research at Counterpoint Global in New York. Previously, he was Director of Research BlueMountain Capital, Read More
In a statement, Schneiderman said: “Redlining is illegal, and it’s discriminatory…”.
Redlining refers to businesses deliberately avoiding particular geographic regions although undertaking company in regions around them.
Evans Bancorp Inc. (NYSEMKT:EVBN) is accused by the Attorney Common’s Workplace of intentionally excluding the predominantly African-American neighborhoods from its lending location, as well as building mortgage merchandise that it stated had been unavailable in those neighborhoods, regardless of creditworthiness. The bank is also accused of refusing to solicit prospects, market mortgages or locate banking facilities in these neighborhoods.
The New York attorney general mentioned he was concerned that banks had ceased lending to minority communities in the years since the mortgage crisis erupted.
Citing some examples, the complaint says Evans received 1,114 residential mortgage applications in the Buffalo metro area from 2009 to 2012 and only 4 came from African-American applicants. Moreover, the complaint highlights that, of those 1,114 applications, just eight came from the East Side neighborhoods and only 1 from an African-American applicant.
Evans violates Fair Housing Act
The lawsuit asks the court to declare the policies and practices of Evans Bancorp Inc. (NYSEMKT:EVBN) a violation of the Fair Housing Act, New York State Human Rights Law and Buffalo City Code.
Repudiating the alleged violation of Fair Housing Act, David J. Nasca, president and chief executive of Evans Bancorp Inc. (NYSEMKT:EVBN), said the allegations by the New York State attorney general are unfounded and without substance and the bank was confident that its residential lending practices meet all applicable laws and regulations.
Pointing to sources briefed on the investigation, Jessica Silver-Greenberg of Dealbook notes the latest suit is a harbinger of other lawsuits that could be brought against some of the nation’s largest banks.