Fair housing center opposes BMO Harris merger, citing poor record of lending to Black Hoosiers

Ko Lyn Cheang, Indianapolis Star
·4 min read

The Fair Housing Center of Central Indiana is trying to stop an acquisition by one of the largest banks that operates in Indianapolis, Chicago-based BMO Harris, arguing that it has a poor track record of mortgage lending to Black residents in Marion County.

The Canadian financial giants, Bank of Montreal and BMO Financial Group, are requesting federal regulatory approval to acquire the California-based Bank of the West in a merger that has incited strong opposition from racial equity advocacy groups across the country.

“We cannot support a merger which would expand their reach and result in additional negative impact upon so many unserved Black households and neighborhoods,” wrote the Fair Housing Center of Central Indiana executive director Amy Nelson in a letter sent on July 14 to the federal Office of the Comptroller for Currency and Federal Reserve System to oppose the proposed merger.

“As we will point out in our comments, mergers rarely benefit communities already suffering from a history of redlining, racial covenants, and other discriminatory practices.”

When asked to comment, BMO Harris spokesperson Scott Doll wrote in an emailed statement, “We are committed to bringing opportunities for affordable homeownership to families in Indiana and all across our footprint. We have strong lending numbers in Indianapolis in low- and moderate-income communities and to low- and moderate-income borrowers, but we continuously look for ways to increase outreach and support to 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.

One of the top 50 biggest mortgage lenders in Marion County, the bank operates 15 branches in Indianapolis, none of which are located in majority-Black neighborhoods now nor in 2012, according to the Fair Housing Center’s analysis.

The Fair Housing Center of Central Indiana found in its January 2022 mortgage lending report that BMO Harris was one of the worst lenders in its rate of loans given to Black applicants.

Only 10% of applications for loans from BMO Harris were by Black applicants from 2018 to 2021, according to the Fair Housing Center’s analysis, compared to 16% on average for the top 50 largest lenders in Marion and 18% by all other lenders.

“These low numbers, coupled with its lack of banking branch presence in neighborhoods of color, in a city with a Black population of nearly 30%, indicates a significant lack of outreach to Black applicants,” Nelson wrote in the letter to the federal reserve.

Nelson will testify today at a public hearing of the Federal Reserve in opposition to the proposed merger. Other fair housing groups across the country have submitted public comments in opposition, similarly citing their poor performance of lending to people of color.

Amy Nelson (left), Fair Housing Center of Central Indiana, speaks during a news conference to announce a program to protect renters' rights, Indianapolis, Wednesday, Jan. 15, 2020. The program will provide protections and legal assistance to the city's most economically vulnerable residents as a safeguard from eviction-related challenges, substandard housing, and vexatious and retaliatory landlords.

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

“(Federal regulators) could absolutely deny the merger or delay the merger or require the lender take some remediation type action, before they approve the merger,” Nelson told IndyStar. “Regulatory agencies have so much control in this area.”

Bank is one of worst in denying loans to Black applicants

According to the Fair Housing Center letter, BMO Harris denied loans to 56% of Black applicants and 47% of Hispanic applicants compared to 30% for white, non-Hispanic applicants during that time. The bank was the second worst among the top 50 largest Marion County lenders in how often it denied loans to Black applicants, according to the Fair Housing Center’s analysis.

The bank only originated 5% of its loans to Black applicants from 2018 to 2021, which is the fifth worst rate of mortgage origination to Black borrowers from all lenders in Marion County, according to the Fair Housing Center's analysis.

Fair Housing Center has alleged mortgage redlining against bank with similarly poor performance

The Fair Housing Center of Central Indiana had previously filed two fair lending legal actions against banks that had similar poor performance in mortgage lending to Black residents.

The case filed against Old National bank alleged the bank was guilty of mortgage redlining, a discriminatory practice that was outlawed by the Fair Housing Act of 1968. The bank settled the case in December 2021.

The Center told IndyStar it has opened an investigation into the lending practices of BMO Harris in Indianapolis regarding their treatment of Black homebuyers.

“It appears that far too many lenders have been able to act without oversight for far too long,” Nelson wrote in an email to IndyStar. “The result is great harm to Hoosiers of color simply wanting the American dream of homeownership.”

Contact IndyStar reporter Ko Lyn Cheang at kcheang@indystar.com or 317-903-7071. Follow her on Twitter: @kolyn_cheang.

This article originally appeared on Indianapolis Star: BMO Harris merger opposed by Fair Housing due to low minority lending