Premium Mortgage offers incentive funds after regulatory deal with NYS

Following an agreement with the New York Department of Financial Services, Premium Mortgage is starting a fund to incentivize the purchase of homes in "historically disadvantaged communities."

The Rochester, N.Y.-based lender was among those investigated by the regulator at the start of the year for their lending practices in Buffalo, N.Y.

The NYDFS concluded its investigation, finding there was no "evidence of intentional discrimination, misconduct or other violations of law" by the company or its employees, according to a Premium Mortgage press release. Still, the company entered into an agreement with the regulator to invest a minimum of $500,000 in homebuyer incentives.

The company was one of those listed by the state in a redlining report issued in February, which found “a distinct lack of lending by mortgage lenders, particularly non-depository lenders, continues today in Buffalo neighborhoods with majority-minority populations and to minority homebuyers in general.” In the city of Buffalo, 85 percent of those who identify as Black live east of Main Street, in neighborhoods that were redlined in the 1930s, that report said.

At that time, an agreement using similar wording regarding intentional discrimination was signed with Hunt Mortgage of Buffalo, which required Hunt to create a special financing program to provide $150,000 in discounts or subsidies on loans for properties in mostly minority communities.

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Premium Mortgage developed the Neighborhood Vitality program and the technology behind it at the start of this year, while the investigation was going on, the company said.

Neighborhood Vitality will be advertised and its funds dispersed through proprietary software that will identify properties in underserved communities in Upstate New York for which the incentive is available. It will also help promote those properties to real estate agents and consumers.

"We did not just want to throw money at the problem — that is easy — anyone can do that," Mike Donoghue, Premium's president, said in a press release. "We wanted to find a way to get the money into the hands of those that need it and can use it to revitalize their neighborhoods." The company said it has already awarded $100,000 in incentives.