- The Washington Times - Friday, September 29, 2000

Minority and low-income borrowers in Washington were up to three times as likely to be turned down for home loans in 1999 in contrast to a falling national rejection rate, according to a new study.
Even among high-income borrowers, blacks were denied more often than whites, said the Association of Community Organizations for Reform Now report. The liberal grass-roots organization has been a gadfly on fair-lending issues.
Critics of the report said that although some discrimination may exist among mortgage lenders, the ACORN study did not take into account important factors such as credit scores and histories. That information is difficult to access because it is not data that lenders are required to disclose under the Home Mortgage Disclosure Act (HMDA).
"Their hearts are in the right place, but this study suffers from all the widely documented flaws that research suffers from using the HMDA database," said Steven Hornburg, executive director of the Research Institute for Housing America, an Arlington mortgage and housing researcher funded by the Mortgage Bankers Association of America.
He noted that income does not necessarily correlate to credit ratings. Most home lenders use credit scores to help determine applicant quality. These scores are based on a number of undisclosed factors, which have come under fire from legislators and consumer groups.
The ACORN report said that in Washington, blacks were 3.01 times more likely to be rejected than whites for primary home loans in 1999. Lenders were 1.85 times as likely to turn down Latino applications as white applications, down from 1998. Nationally, black applicants were denied 1.96 times and Latinos 1.41 times more often.
A local loan officer, who would not let his name be used, said mortgage companies are under the gun from regulators, thus consider minority-loan applications very carefully.
He said credit scores and histories do play a large role in determining whether or not someone gets credit.
And he said there are cultural differences in the way people use credit. In his experience, even high-income blacks had poorer credit than high-income whites.
Jordan Ash, who authored the ACORN study, said lenders should be required to disclose the credit scores of mortgage applicants, as well as loan products for which borrowers applied.
But he defended the study, saying discrimination does still play a role in mortgage denials.
"We've seen that the disparity is so great that it can't be explained away by things such as credit," he said.
Roderic Boggs, director of the Washington Lawyers Committee for Civil Rights and Urban Affairs, said he has seen discrimination firsthand in cases the committee has argued against lenders.
In individual cases, "there's a disparity that can't be explained on any basis but race," he said.
But on a grander scale, "we don't really know precisely why this is happening," he said.
Mr. Ash said that ACORN will use the study's data to continue to work for fair housing.
"We'll continue to target specific lenders that we feel are not doing as good a job as they could be in terms of meeting the needs of low income and minority communities," he said.
The group will also push for stronger legislation and regulation governing lenders.
Other community groups have found racial lending discrepencies. "There's a tale of two cities here," said Josh Silver, vice president of research and policy for the National Community Reinvestment Coalition.
His organization found that subprime lenders, those making high-interest, high-risk refinanced loans, were concentrated in minority areas of the District, while the majority of prime refinanced loans were made in white areas in 1998.
If prime lenders were to enter minority areas, "it would help revitalize low- and moderate-income communities and there's an untapped market," Mr. Silver said.

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