The New York Attorney General filed a complaint this week in a New York federal court against a national bank headquartered in the state and its holding company alleging that the defendants violated the federal Fair Housing Act (FHA) by engaging in “redlining.” The defendants’ actions were also alleged to violate the state’s Human Rights Law and the Buffalo City Code.

According to the complaint, which the Attorney General claims to have filed pursuant to his parens patriae powers, the defendants intentionally discriminated against African Americans in the Buffalo metro area on the basis of race in violation of the FHA by limiting the geographic area in which the bank marketed and sold its mortgage loan products (termed the bank’s “Trade Area”) to exclude certain neighborhoods in which the majority of residents were African American (termed the “Eastside neighborhoods”). The practice of not offering products or services to residents of predominantly minority communities has been labeled “redlining.” The defendants’ alleged policies and practices on which the Attorney General’s “redlining” claim is based include:

  • Automatically disqualifying borrowers with properties outside the Trade Area from eligibility for certain mortgage loan products regardless of the borrower’s creditworthiness
  • Locating branch offices and branded ATMs outside of the Eastside neighborhoods
  • Placing the majority of advertising in newspapers that are not distributed in the Eastside neighborhoods or in ethnic media sources not directed towards African Americans

To demonstrate “the discriminatory effects” of the defendants’ alleged redlining, the complaint compares the bank’s Home Mortgage Disclosure Act (HMDA) data with HMDA data reported by other Buffalo-area banks. According to the complaint, such data shows that the defendant bank lagged behind other Buffalo area banks in generating mortgage applications from and making mortgage loans to African American borrowers and Eastside neighborhood borrowers of any race. (Peer group HMDA data has similarly been used by the U.S. Department of Justice (DOJ) to support redlining lawsuits.)

While alleging that the defendants’ redlining “is motivated by a discriminatory intent and results in disparate treatment” of Buffalo-area African Americans on the basis of race, the complaint also includes a disparate impact claim. Describing the alleged disparities between the defendant bank’s lending activity and that of other banks shown by the HMDA data as “statistically significant,” the complaint alleges that the defendants’ practices resulted in a “disparate impact on African-Americans and Eastside residents” and “are not necessary to achieve any of [their] substantial legitimate, nondiscriminatory interests.”  

In framing the case as an intentional discrimination/disparate treatment case while also including a disparate impact claim, the Attorney General is also following the DOJ, which has pled cases in this way so as not to rely exclusively on a disparate impact theory of liability. (The U.S. Supreme Court may have its third opportunity to decide whether disparate impact claims are available under the FHA if it grants certiorari in Inclusive Communities Project v. Texas Dep’t of Housing.)

To help consumer credit providers prepare for examinations and to prevent, manage, and defend against the increasing number of fair lending challenges, Ballard Spahr has created a Fair Lending Task Force. The task force brings together regulatory attorneys who deal with fair lending law compliance (including the preparation of fair lending assessments in advance of Consumer Financial Protection Bureau examinations), litigators who defend against claims of fair lending violations, and attorneys who understand the statistical analyses that underlie fair lending assessments and discrimination claims.

Ballard Spahr's Consumer Financial Services Group is nationally recognized for its guidance in structuring and documenting new consumer financial services products, its experience with the full range of federal and state consumer credit laws, and its skill in litigation defense and avoidance. Our attorneys, including the attorneys who joined us from the New York City litigation firm Stillman & Friedman, P.C., to form Ballard Spahr Stillman & Friedman LLP, have substantial experience in handling litigation with the New York Attorney General and the state’s Department of Financial Services.

For more information, please contact CFS Practice Leader Alan S. Kaplinsky at 215.864.8544 or, Marjorie J. Peerce at 212.223.0200 x8039 or, John L. Culhane, Jr., at 215.864.8535 or, Christopher J. Willis at 678.420.9436 or, or Mortgage Banking Group Practice Leader Richard J. Andreano, Jr., at 202.661.2271 or




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