After thorough scrutiny, Premium Mortgage promises to increase loans for people of color



The Rochester-based mortgage lender has pledged to invest $ 500,000 in loan incentives for homebuyers in historically disadvantaged areas of upstate New York after its lending models became the subject of state regulatory scrutiny.

The move by Premium Mortgage follows a State Department of Financial Services report on mortgage lending practices in the Buffalo area, which mentioned that Premium and other lenders “clearly do not lend” to people of color and in their predominantly populated areas.

A report released in February found that while about 20 percent of the area’s population is of color, minority mortgages accounted for less than 10 percent of total mortgage loans in the area between 2016 and 2019.

When referring to census sites that the department considered “majority-minority”, regulators found that about 4.5% of loans were made in these sites. Of the 4,841 premium mortgages, approximately 3.9 percent were in minority areas. In contrast, Evans Bank and Five Star Bank provided more than 12 percent of their loans in these territories.

The investigation found no signs that Premium or any other institution discriminated against borrowers. According to the report, loan applications were not rejected at inflated rates and, in fact, approval rates were high for minority applicants.

But, as noted in the department, “these companies practically did not interact with minority shareholders and, as a rule, made meager efforts for this.”

In part, the investigation focused on the results of several “non-depository creditors” working in the Buffalo metro, one of which was Premium. Nondepository lenders usually focus on mortgages and do not offer other financial products such as savings and checking accounts like banks do.

A report from the Ministry of Financial Services says that these institutions account for a growing share of mortgage loans across the country. According to the report, 70 percent of new mortgages were issued by banks in 2013, while “non-banks” now issue most of the mortgages they often sell in the secondary market.

The report noted that the agency’s investigation into one non-bank lender, Hunt Mortgage Corp., was completed and that the department found no deliberate discrimination or violation of fair credit laws.

But in a “good faith effort to increase lending to minority areas and minority borrowers,” Hunt has struck an agreement with the Department of Financial Services to improve its services, the report said.

Under this agreement, Hunt will increase marketing to minority and minority communities, commit to a funding program that will provide at least $ 150,000 in concessional or subsidized loans to homes in minority areas, and train its employees annually and agents about fair lending.

This agreement appears to have been a model for Premium’s agreement with the Department of Financial Services.

In a June 28 statement announcing the deal, Premium executives noted that the department had completed an investigation into the company and found no evidence of willful discrimination, misconduct or other wrongdoing.

But, executives said, Premium has decided to strike an agreement with the department to launch a new $ 500,000 Neighborhood Vitality homebuyer reward program.

“We didn’t just want to spend money on this problem – it’s easy, anyone can do it,” Premium Mortgage President Mike Donoghue said in a statement. “We wanted to find a way to get the money into the hands of those who need it and can use it to revitalize their neighborhoods.”

Trade publication National Mortgage News announced that Premium will advertise the Neighborhood Vitality program and disburse funding through proprietary software that identifies underserved communities in upstate New York.

In a press release, Premium said it launched the Neighborhood Vitality program earlier this year while it was still under investigation and has already distributed $ 100,000 in incentives.

Jeremy Moole is CITY News Editor. You can contact him at


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