BMO Harris merger opposed by Fair Housing due to low minority lending

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That Fair Housing Center of Central Indiana seeks to stop a takeover by one of the largest banks operating in Indianapolis, Chicago, BMO Harris, arguing that it has a poor track record of providing mortgages to black Marion County residents.

Canadian financial giants Bank of Montreal and BMO Financial Group are Application for State Regulatory Approval to Acquire California-based Bank of the West in a Merger This has drawn strong opposition from racial justice advocacy groups across the country.

“We cannot support a merger that would expand its reach and have additional negative impacts on so many unserved Black homes and neighborhoods,” wrote Amy Nelson, executive director of the Fair Housing Center of Central Indiana, in a letter issued July 14 was sent to the Federal Office of the Comptroller for Currency and Federal Reserve System to object to the proposed merger.

“As we will emphasize in our comments, mergers rarely benefit communities that already suffer from a history of redlining, racial alliances and other discriminatory practices.”

When asked for comment, Scott Doll, spokesman for BMO Harris, wrote in an emailed statement, “We are committed to providing affordable homeownership opportunities to families in Indiana and throughout our presence. We have strong lending to low- and middle-income communities and to low- and middle-income borrowers in Indianapolis, but we are constantly looking for ways to increase outreach and support for minority borrowers.”

The bank’s subsidiary, BMO Harris, is one of the largest banks in the Midwest and country with over 500 branches in Illinois, Indiana, Arizona, Missouri, Minnesota, Kansas, Florida and Wisconsin.

The bank is one of the top 50 mortgage lenders in Marion County and operates 15 branches in Indianapolis, none of which are located in black-majority neighborhoods today or in 2012, according to Fair Housing Center analysis.

The Fair Housing Center of Central Indiana found in its January 2022 Mortgage Credit Report that BMO Harris was one of the worst lenders in terms of loan rates for black applicants.

According to Fair Housing Center analysis, between 2018 and 2021, only 10% of BMO Harris’ loan applications were from black applicants, compared to an average of 16% for the top 50 lenders in Marion and 18% for all other lenders.

“These low numbers, coupled with the lack of presence of bank branches in colored neighborhoods in a city with a nearly 30% black population, indicate a significant lack of contact with black applicants,” Nelson wrote in the letter to the Federal Reserve.

Nelson will testify against the proposed merger at a Federal Reserve public hearing today. Other fair living groups across the country have submitted public statements in oppositionand similarly referenced their poor performance in lending to people of color.

She said federal regulators have the power to force the bank’s hand.

“[Federal regulators]could absolutely refuse or delay the merger or require the lender to take corrective action before they approve the merger,” Nelson told IndyStar. “Regulators have so much control in this area.”

The bank is one of the worst when it comes to refusing credit to black applicants

According to the Fair Housing Center letter, BMO Harris denied loans to 56% of black applicants and 47% of Hispanic applicants during that time, compared to 30% for white non-Hispanic applicants. According to the Fair Housing Center analysis, the bank was ranked second-worst among the top 50 lenders in Marion County when it came to the rate at which it refused loans to black applicants.

The bank made only 5% of its loans to black applicants from 2018 through 2021, which is the fifth-worst black mortgage origination rate of any lender in Marion County, according to Fair Housing Center analysis.

The Fair Housing Center has claimed a mortgage redline against a similarly underperforming bank

The Fair Housing Center of Central Indiana had previously filed two fair lending lawsuits against banks that had similarly poor performance in lending to black residents.

The case filed against the Old National Bank, which claimed the bank was guilty of mortgage redlininga discriminatory practice prohibited by the Fair Housing Act 1968 Bank settled the case in December 2021.

The center told IndyStar it had opened an investigation into Indianapolis-based BMO Harris’ lending practices regarding its treatment of black homebuyers.

“It seems far too many lenders have been able to operate without oversight for far too long,” Nelson wrote in an email to IndyStar. “The result is great harm to Hoosiers of color who just want the American dream of home ownership.”

Contact IndyStar reporter Ko Lyn Cheang at [email protected] or 317-903-7071. Follow her on Twitter: @kolyn_cheang.

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