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Brooklyn Congressman Charles Schumer’s recent study on minority loans confirms much of what members of the anti-redlining movement have known for years: African-American and Hispanic applicants are turned down far more frequently than whites who apply for the same loans with the same credit history.
The report does contain one big surprise: Schumer’s singling GreenPoint Bank out for having the best minority lending record of any bank in New York. In fact City Limits has learned that the New York State Banking Department is investigating the bank for allegedly engaging in damaging lending practices.
State investigators are looking into charges that GreenPoint’s high-risk loan policy had led to excessive foreclosures that may hurt 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 in 11 landlords had taken out higher loans than they could afford to re-pay. “They were significantly over-leveraged,” says Brad Lander, the 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 counter by citing an internal 1995 study that they says 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.
In addition, Bluver claims 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.”