L.A.’s Slums and Slumlords

Your loose use of the word “slumlord” pinpoints the lack of definition of this term. Highland Federal Savings and Loan stated that we never have knowingly loaned money to a “slumlord.” In so doing, we used the city attorney’s reference to a “slumlord” as a landlord who has been convicted of one or more housing code violations at his property.

Highland Federal has made countless loans to landlords, which were secured by their properties in so-called “slum” areas or whose properties have been designated as in “slum” condition. All owners of of these types of buildings face the prospect of housing code violations from time to time, but the city attorney applies the term “slumlord” to only that handful of landlords who (with some notable exceptions) are selectively and seemingly arbitrarily prosecuted. Since housing code violations on these types of properties are inevitable from time to time, as your last article seems to recognize, should all of these landlords--including those you profiled favorably in your articles--be considered “slumlords”? Highland Federal is proud of the fact that we have made thousands of loans over our 20-year history to inner-city borrowers. We have never practiced “red-lining,” the arbitrary exclusion of these types of loans, although not very many other associations have made these loans. And, we charge the same loan fees and use the same interest rate structure in that sector of the city as we do for loans in Beverly Hills or Burbank. Isn’t it more accurate--and fairer--therefore, to associate us with the overwhelming percentage of reputable borrowers who are attempting against all odds to keep their buildings up to code, rather than target us as the backers of so-called “slumlords”?

One of the articles includes references to unsupported allegations by the city attorney which suggest that Highland Federal has falsely inflated its assets. Anyone sophisticated in the savings and loan industry would not have made such ludicrous allegations; their repetition in the article demonstrates a similar naivete on your part.

Finally, the series fails to mention anywhere that Highland Federal was a pioneer lender to the inner city going back 20 years, significantly helping the economy of those areas. We are a strong, financially sound and profitable association which has proved that lending to the inner city can be done successfully, if done prudently and if the city attorney’s staff is judicious in its enforcement policies.

Indeed, we believe, and many people outside of the company have told us, that instead of being subjected to a headline-grabbing lawsuit by the city attorney’s office attempting to hold Highland Federal to a new standard of lender responsibility as if we were the landlord, Highland Federal should be commended for the role we have played in funding residential and commercial development in the inner city.

BEN KARMELICH

President, Highland Federal

Savings and Loan