NEW YORK, Aug 31 (Reuters) - M&T Bank Corp agreed to upgrade its mortgage lending policies to settle a lawsuit by a nonprofit group that accused the large mid-Atlantic lender of discriminatory mortgage lending practices in New York City.
The settlement with the Fair Housing Justice Center and nine individuals was announced on Monday, and lasts three years.
It bans M&T loan officers from “steering” borrowers to particular neighborhoods or loans based on their race or national origin, or using census tract data regarding race or national origin as a criterion in offering mortgages.
M&T also agreed to improve training, using recommendations from an independent consultant it will hire, and pay $485,000 to the plaintiffs for damages and legal fees.
The Buffalo, New York-based lender denied wrongdoing in agreeing to the settlement, which won approval on Monday from U.S. District Judge Katherine Forrest in Manhattan.
In a statement provided by the nonprofit group, M&T said it is “deeply committed to fair housing and fair lending.”
The lawsuit arose from M&T’s alleged treatment of female “testers” hired by the nonprofit group to pose as first-time home buyers who were married and had no children.
M&T was accused of encouraging non-white testers to buy homes in lower-income or “majority minority” neighborhoods, such as Harlem in Manhattan or St. Albans in Queens, and white testers to move to majority-white areas such as Murray Hill in Manhattan.
White testers were also told they could afford larger loans and costlier homes than more qualified non-white testers, the complaint said.
The settlement is separate from federal regulatory probes into whether M&T complied with underwriting guidelines for loans insured by the Federal Housing Administration, and mortgages sold to Fannie Mae and Freddie Mac.
M&T on August 5 said it is cooperating with those probes, and that settlement talks had begun.
The case is Fair Housing Justice Center Inc et al v. M&T Bank Corp, U.S. District Court, Southern District of New York, No. 15-00779. (Reporting by Jonathan Stempel in New York; Editing by Dan Grebler)