REPORT: KeyBank Promised To Improve, Then Became The Worst Major Mortgage Lender For Black Homebuyers

After pledging to better support underserved communities if regulators approved a 2016 merger, KeyBank instead became, by one measure, the nation’s worst major mortgage lender for Black homebuyers, the National Community Reinvestment Coalition (NCRC) revealed Thursday in a new report.

NCRC’s analysis of federal mortgage data from the past four years found that KeyBank’s share of mortgage originations to Black borrowers was the lowest among the nation’s 50 largest home purchase lenders. The report also found indications that KeyBank engaged in redlining in several major cities and a dramatic drop in the bank’s overall lending to low- and moderate-income (LMI) borrowers.

“KeyBank executives looked community groups in the eye and promised to become a leader on inclusive home mortgage lending – then did the exact opposite,” NCRC President and CEO Jesse Van Tol said. “They used those promises to get a merger approved, then cashed out huge dividends from the deal for their own gain while steering their company away from Black neighborhoods, Black borrowers and other marginalized communities. Among the 50 biggest mortgage lenders, KeyBank not only failed to lead on Black homeownership – they became the worst at it nationwide.”

NCRC’s report found that KeyBank trailed most or all of its local competitors in share of home lending to Black and LMI borrowers in most of the cities where it operates. KeyBank also appeared to engage in systemic redlining, making vanishingly few home purchase loans in neighborhoods where Black families were clustered. Inclusive home lending metrics indicate that the bank’s performance worsened each year since it promised community groups it would do the opposite.

CLICK HERE to read the full report, including city-by-city breakdowns of KeyBank’s apparent redlining across each of its major markets.

These failures to adequately serve marginalized groups broke faith with a Community Benefit Agreement (CBA) that KeyBank signed with NCRC members in 2016. Accordingly, Van Tol said, NCRC has broken off negotiations with the bank on a new CBA.

“When a person breaks their promise to a bank, the bank holds them accountable through foreclosures, fees and other penalties. So when a bank breaks its promises to people, there should be consequences as well,” Van Tol said. “That’s why I’m done dealing with KeyBank. They failed the most vulnerable and neglected people in their cities and made a bunch of money in the process. Enough is enough.”

The commitments KeyBank made to LMI communities in that initial 2016 agreement helped the bank win regulatory approval for a merger the bank later touted as a major driver of both profit growth and dramatically higher dividend payments to shareholders, even as they made less and less of an effort to help non-White, non-wealthy customers buy homes.

NCRC staff and member organizations have recently poured months of work into talks with KeyBank in hopes of renewing, expanding and strengthening the Community Benefits Agreement KeyBank signed in 2016. But after discovering that KeyBank had abandoned the commitments it made to NCRC members six years ago – and then used the profits from its merger with First Niagara to pay out huge dividends to insiders while largely abandoning Black and low-income communities in its service areas – NCRC concluded the bank could not be trusted to follow through on any new promises it makes to better serve marginalized communities.

The detailed and damning findings underlying NCRC’s decision to pull out of talks with KeyBank can be read here. 

Press interested in speaking with NCRC about this matter should email Alan Pyke apyke@ncrc.org to arrange interviews.