A new report by the National Community Reinvestment Coalition (NCRC) found that major mortgage lender and bank KeyBank has underserved Black borrowers in the Philadelphia region — despite promises by the bank to boost loans to Black borrowers.
In 2021, only 2.2 percent of the more than 1,2000 mortgages KeyBank approved in that area went to Black borrowers. By contrast, other top banks in the area reported that more than 8 percent of their loans went to Black home buyers, Motley Fool’s the Ascent reported.
Formed in 1990, the NCRC is composed of national, regional and local organizations whose goal it is to increase the flow of private capital into traditionally underserved communities.
KeyBank Turned Away Black Loan Applicants
Between 2018 and 2021, the bank saw a significant drop in approved Black mortgage applicants, with only 27 of the 1,225 bank’s mortgage borrowers (or 2.2 percent) being Black people, reported the Philadelphia Inquirer.
A majority of KeyBank’s lending in the Philadelphia metro area took place in neighborhoods with fewer Black residents. Out of the bank’s 25 branches in southeastern Pennsylvania, only one is located in Philadelphia, where about 40 percent of the population is Black. Many KeyBank branches are in Montgomery County, where only about 10 percent of the population is Black, according to 2020 Census data.
In response to the backlash, KeyBank underlined a $25 million commitment “to continue to increase mortgage lending” towards people of color, but it did not admit wrongdoing, adding that the bank “does not discriminate and does not lend based on race.”
The statement continued, “KeyBank’s lending decisions are applied consistently to all potential borrowers and are based on predetermined criteria in accordance with fair lending laws. Any decision to deny an applicant is based solely on the financial information and data associated with the applicant.”
A spokesperson for KeyBank pushed back against the negative NCRC report, telling MarketWatch that the bank increased loans to Black borrowers by 24 percent from 2018 to 2021 and “more than doubled its lending to all minority groups during this same time period.”
Loan Discrimination Remains Widespread
KeyBank was not the only bank to have allegedly discriminated against Black homeowners.
TrustMark National Bank is the 47th-largest bank in the U.S. by how many branches it operates, with 174 locations in five states, Mississippi, Alabama, Tennessee, Florida, and Texas, to be exact.
Its Tennessee branches, however, were part of a mortgage lender probe that found the banks were engaging in prejudice against predominantly Black and Hispanic neighborhoods, leading the way for TrustMark National Bank to settle $8.85 million, according to The Motley Fool.
Today, only about 45 percent of Black households own their own homes, while white households own 74 percent of theirs, and the gap between racial homeownership is getting wider – in 1970, it was 24 percent, but now, it is 30 percent.
A nationwide initiative spearheaded by the Justice Department to address discriminatory practices in the mortgage lending industry found banks, from regional to some of the country’s largest, have been denying Black people the opportunity to become mortgage borrowers.