Mortgage growth to minorities down

Journal Record, The (Oklahoma City), Aug 7, 1998

WASHINGTON (AP) -- Despite government programs aimed at helping minorities become homeowners, growth in mortgage loans to those groups slowed markedly last year, according to government data released Thursday.

And lenders are turning down blacks, Hispanics and American Indians for home loans far more often than whites and Asians, no matter what their income, according to the latest annual survey of 7,925 banks, thrifts and credit unions nationwide.

Calling the report "abysmal," NAACP President Kweisi Mfume said it demonstrates "a major failing on the part of financial institutions around this country."

"There really has to be greater (government) oversight" of the industry, he stated. Mfume said he and Rep. Joseph P. Kennedy II, D- Mass., plan to ask Attorney General Janet Reno for an investigation of banks' lending practices.

The banking industry maintains that lenders continue to seek qualified borrowers in minority communities.

"Banks continue to reach out to communities, as evidenced by... increases in (mortgage) applications," said Judith Knight, director of the American Bankers Association's Center for Community Development. "However, as the net is cast more widely, applicants become more diverse, including many who are not (qualified). As a result, denial rates continue to show increases."

The data compiled by the Federal Financial Institutions Examination Council, which is comprised of the bank regulatory agencies, show that conventional home mortgage loans made to Hispanics declined 2.1 percent in 1997 from the year before, to 132,808.

Conventional mortgages, those not backed by government guarantees, obtained by American Indians slipped 1 percent, to 11,254. Conventional loans to blacks rose 2.6 percent, to 139,544 -- reversing a 1.5 percent decline in 1996 but down sharply from a 9.7 percent increase in 1995.

In each case, the latest figures compared with hefty, often double-digit increases in mortgage loans for those groups in previous years.

Conventional loans to whites rose 2 percent, to some 2.4 million. For Asian Americans, they jumped 12.7 percent, to 103,192.

At the same time, Hispanics, blacks and American Indians at all income levels are getting rejected for conventional mortgages more frequently than white borrowers, the data show.

For borrowers with less than 50 percent of the median family income in their geographical area, 48.1 percent of Hispanic applicants are denied, 57.2 percent of blacks and 55.1 percent of American Indians, compared with 46.3 percent of whites.

As income rises to 50 percent to 79 percent of median income, the denial rates are: 37.6 percent for Hispanics, 45.6 percent for blacks, 43.2 percent for American Indians and 29.4 percent for whites.

At 80 percent to 99 percent of median income, the rejection rates are: 30.7 percent for Hispanics, 37.4 percent for blacks, 34.4 percent for American Indians and 20.1 percent for whites.