Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, November 5, 1993 TAG: 9311050111
SECTION: BUSINESS PAGE: A-13 EDITION: METRO
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Medium
Attorney General Janet Reno and Housing Secretary Henry Cisneros said their agencies will increase enforcement of fair-lending laws and educate lenders to comply with those laws.
The Department of Housing and Urban Development will determine whether there is a pattern to complaints against some institutions. The Justice Department will pursue lawsuits against those lenders if they fail to comply.
"While it can be expensive . . . the power of persuasion in the courtroom cannot be denied," Reno said. "I am confident we will produce unprecedented results."
The plan was presented to the Senate Committee on Banking, Finance and Urban Affairs on the heels of rising complaints about bias in mortgage lending.
Community groups and civil rights activists say banks deny mortgages to minorities while approving them for whites with similar incomes and debt.
Data released Thursday under the Home Mortgage Disclosure Act showed 36 percent of blacks and 27 percent of Hispanics who applied for home loans in 1992 were denied, compared to 16 percent of white and 15 percent of Asian applicants.
But banking industry representatives said they are working hard to eliminate bias.
(Officials at Virginia banks that were part of the study said their main problem is recruiting minority customers to apply for loans.
A story published Oct. 14 by the Roanoke Times & World-News showed the six statewide banks operating in the Roanoke Valley received 276 applications from minority customers last year, a 30.8 percent increase over 1991.
While the rejection rates for white customers ranged between 4.6 percent and 19 percent among the banks, the rate that they turned down minorities averaged about 45 percent.)
The lenders being targeted nationwide include subsidiaries of financial institutions and others not regulated by federal agencies.
"Home ownership is one of our cherished American dreams," Reno said. "These statistics are of great concern to us."
But she said most banks are trying to be fair. "A lot of people just didn't know they were guilty of disparate treatment," she said.
The banking industry said it is doing all it can to ferret out bias. The data, bankers said, is a flawed measure of lending fairness because it does not consider factors such as credit history, debt load or the value of collateral.
Donald G. Ogilvie, executive vice president of the American Bankers Association, said the 1992 lending figures are skewed by a large number of refinancings in mostly white, suburban areas. Plus, he said, efforts by banks to reach out to minority applicants have drawn a greater number of first-time buyers who lack credit histories.
"We recently mailed a fair-lending checkup to every bank in the country. We've produced videos and manuals on equal treatment. I can't think of another industry in this country that is taking a more pro-active stance."
But Cisneros said some banks practice subtle bias, such as withholding helpful information from minority applicants, limiting services available in minority neighborhoods, or failing to put rejected applications through a second review.
"It tells us discrimination is still alive and well in America," Cisneros said. "We cannot allow these disparities to continue. The availability of credit is a necessity of life."
Figures for FDIC-regulated lenders showed 29 percent of black applicants and 25 percent of Hispanics were denied mortgages, compared to 11 percent for whites and 13 percent for Asians.
by CNB