Brooklyn Congressman Charles Schumer’s recent study on local banks’ minority lending practices contains one big surprise: Schumer singles out GreenPoint Bank for having the best minority lending record of any New York bank. In fact, City Limits has learned that the New York State Banking Department is investigating the bank for allegedly engaging in a high-risk loan policy that leads to excessive foreclosures and hurts low-income tenants.

At issue is GreenPoint’s long-standing policy of offering loans with high down payments and steep up-front fees–without asking applicants to submit extensive credit histories or provide documentation.

Last year, the Fifth Avenue Committee randomly surveyed 18 buildings that GreenPoint had lent to in Brooklyn and found that 11 of the landlords had taken out higher loans than they could afford to repay. “They were significantly overleveraged,” says Brad Lander, FAC’s executive director. “In order to deal with high payments, landlords must try to increase their income by raising rents or by deferring maintenance. Either way it hurts the tenants.”

GreenPoint officials maintain that an internal 1995 study proves their lending has been helpful to communities. “We found that only five of our buildings out of thousands had had multiple foreclosures. Four were in Long Island and only one was in Brooklyn,” says Harold Bluver, an attorney for GreenPoint, who adds that a recent meeting with state investigators “completely vindicated” the bank.

“He’s a liar,” counters Lander, who attended the meeting. “I believe that the preliminary information presented by the banking department substantially confirms our allegations.”