Bank Loan Practices Biased Over the Years, Blacks Say : Finance: L.A. city officials hope perception will change with proposed law to require disclosure of lending actions.

It might have been because she was black. Or because she was a woman. Or simply because she was young and just getting started. Whatever the motive behind the bank’s decision, Mildred Hogan still remembers the first time she was unceremoniously denied a home loan.

“First, they give you the brush-off,” the 65-year-old resident of South-Central Los Angeles said. “Then they turned us down flat.”

That was years ago. Hogan and her husband, both employed at the time, were eventually able to secure a loan at another bank. But she doubts that things today are any easier for many minority and low-income Los Angeles residents whose dream is to buy a home.

“Nothing’s changed,” she said.

Now, city officials hope to change things. Mayor Tom Bradley this week proposed a law that would require banks and thrifts to disclose their lending practices in an effort to give minorities access to a fair share of home-purchase and home-improvement loans. The city would use that data in ranking banks that are seeking city money.

The proposal was introduced to the City Council on Friday, and is expected to be voted on within two months.

Bradley said the law will help pinpoint sections of the city where loans have been unfairly denied.

Because obtaining loans in South-Central Los Angeles, the Eastside and other lower-income areas is more difficult, residents are often forced to turn to unscrupulous lenders who charge enormous interest rates. Fraud is also rampant, and in the most egregious cases, unsuspecting homeowners have been cheated out of their property.

To buttress its case, the city is pointing to a survey by USC and the Western Center on Law and Poverty that appeared to show a pattern of red-lining by major banks. The study found that banks and savings and loan institutions make fewer and smaller residential loans in low-income and minority neighborhoods than in the city at large.

Federal law already requires banks to disclose information on loans in poor neighborhoods, but Bradley said the new ordinance would require more detailed reporting.

Claytee White is one resident who is hopeful the new law will have an impact.

White, who is now an officer with the Los Angeles chapter of the National Assn. for the Advancement of Colored People, worked in real estate financing, primarily in minority neighborhoods, for nearly four years. Routinely, she found herself helping black homeowners and potential homeowners who were reluctant to seek loans in major banks.

Many of her customers, she concedes, did not have impeccable credit ratings. But she wonders if that was the only reason banks turned them down.

A typical example, White said, was that of a black couple--she a nurse, he an aerospace technician--who owned a home in a well-to-do section of Inglewood. The couple also owned three pieces of rental property in the Crenshaw District.

Their application for a loan was turned down because of one negative entry on their credit rating report, bank officers said.

Forced to accept that explanation, White eventually brokered a loan for the couple through a savings and loan institution.

“I had a feeling their credit was not bad enough to be turned down,” White said. Still, she says, “It never occurred to me they were turned down because they were black. Now I’m having second thoughts about a lot of people who came to us.”

Before Bradley’s proposal this week, some banks were acting to make loans more readily available to customers in lower-income neighborhoods.

Bank of America, the largest in California, recently established new criteria for reviewing loan applications and stepped up recruitment of minority loan officers.