Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, July 19, 1995 TAG: 9507190040
SECTION: BUSINESS PAGE: B-7 EDITION: METRO
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Medium
Mortgage lenders still reject black applicants more than twice as often as whites with similar incomes, though minorities are being helped by low-income home-loan programs, a government report said Tuesday.
A survey by five federal regulatory agencies said that banks, savings institutions and credit unions last year turned down 33.4 percent of mortgage applications received from blacks, 31.6 percent from American Indians, 24.6 percent from Hispanics, 16.4 percent from whites and 12 percent from Asians.
``The extent to which racial discrimination may account for these differences is not known,'' said the Federal Financial Institutions Examination Council, representing the five agencies.
``Differences in the distribution of applicants by income account for some of the differences in loan rates,'' the group said. ``Other factors are more important, however, since whites and Asian applicants in all income groups had lower rates of denial than black, Native Americans or Hispanic applicants.''
The new figures are about the same as those of 1993 and vary little from 1990, the first year the survey was done. The statistics also support other recent findings.
The Chicago Federal Reserve Bank reported last week that black home-loan applicants are more than twice as likely to be denied credit as whites, and Hispanics are rejected more than 11/2 times as often as whites.
But last week's report said white and minority applicants who had good credit histories and low levels of debt were denied loans at about the same rate.
Minority applicants whose monthly costs ate up a large part of their income and who had poor credit histories were turned down disproportionately when compared to whites in similar financial difficulties, the report found.
Banking industry representatives have challenged the accuracy of the federal data and say they have made large strides in recent years to extend loans to minorities and the poor.
``Lenders are eliminating discrimination where they find it,'' said Douglas Duncan of the Mortgage Bankers Association of America. He said in the highly competitive lending environment of 1994 it would have been unlikely for banks to risk their own survival by denying loans to creditworthy customers, regardless of race.''
``If your survival depends on making loans, you would make the loan,'' he said.
Tuesday's report by the federal regulatory agencies said programs to benefit low- and middle-income families ``may be having an impact.''
Conventional home loans extended to lower-income households went up 27 percent in 1994 while lending to the highest income households rose 12.5 percent, the report said.
When broken down by race and ethnic groups, the survey found the number of home loans shot up 54.7 percent for blacks, 45 percent for Hispanics, 23.8 percent for American Indians, 18.6 percent for Asians and 15.7 percent for whites.
The data covered 12.2 million home-loan applications, 21 percent fewer than 1993, due largely to a drop-off in mortgage refinancing as interest rates rose last year.
The figures were compiled from more than 9,800 lending institutions surveyed by the Federal Reserve System, the Federal Deposit Insurance Corp., the National Credit Union Administration, the Office of the Comptroller of the Currency and the Office of Thrift Supervision.
by CNB