Adirondack and Chemung Banks Tackle Discriminatory Lending Rate Investigation | Business


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The dealer would then charge the borrower a higher rate. The difference between the bank’s buy rate and the rate charged to the buyer is called the dealer’s mark-up and forms the basis of the dealer’s compensation.

The buyer’s race and ethnicity may be obvious to the financial agent sitting with them at the dealership, but these details are not recorded in the loan application details forwarded to the bank.

The DFS found that the dealer mark-up in Adirondack loans from January 1, 2016 to October 31, 2017 was 0.59 percentage points higher for black borrowers than for white borrowers, 0.46 points higher for borrowers. Hispanic and 0.30 point for Asian borrowers.

He said the dealer’s mark-up was 0.20 to 0.27 percentage points higher for Hispanic borrowers in Chemung than for white borrowers from 2016 to 2020.

He said the differences were not based on the creditworthiness of the respective borrowers or any other objective criteria.

DFS used a complex proxy model that takes into account a borrower’s address and last name to assign borrowers a probable run within the time frame involved in the investigation.

In a statement Tuesday, Adirondack said, “We are happy to resolve this matter. We abhor and condemn discrimination based on race, sex or gender identity, beliefs, sexual orientation, disability, nationality, marital or family status, age and military status. We are committed to providing equal access to financial services for all of our customers and communities.

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