O.C. Blacks Face Obstacles in Getting Home Loans, Study Finds : Mortgages: Research shows that blacks here were approved for financing 64.5% of the time in 1990, while whites were approved 72.8% of the time.
Despite their fractional slice of the population, blacks in Orange County may face similar obstacles as blacks in Los Angeles in trying to obtain home mortgage loans, according to a computer-assisted study of federal records by the Los Angeles Times.
Blacks make up only 1.6% of the county’s 2.41 million residents, and they applied for only 1.1% of all home loans in 1990, according to the study of mortgage lending practices in Orange and Los Angeles counties.
While the numbers of applications and rejections are too small to prove anything conclusively, they indicate a possible trend toward discrimination in home loans that rivals the gap between the rates of loan approvals for whites and blacks in Los Angeles County.
Certainly, the Orange County statistics mean something to the scores of blacks who can’t get loans or gave up trying, say real estate and mortgage brokers who serve Orange County’s 39,159 blacks. Indeed, many blacks feel the obstacles here are similar to ones they would confront in Los Angeles and other metropolitan areas, they said.
“I’ve been in a mortgage company, Active Mortgage, for three years, and I haven’t made a loan,” said William Jones, who also runs Gemstone Realty in Santa Ana. “I don’t know any blacks who can afford a home loan, and I don’t speak Spanish or Vietnamese.”
Blacks also find that other frequent obstacles to loan approval are past credit or job problems, said Jones and other black brokers.
Beyond the institutional reasons, Jones also senses that bankers often treat blacks and other minorities with distrust. “They act like you’re coming in to rob the place,” he said.
That sentiment is not shared by all blacks and certainly not by lenders.
“Everybody is making a real honest effort to treat everybody exactly the same,” said Stephen W. Prough, president and chief executive of Western Financial Savings Bank in Irvine.
Some institutions, like Plaza Savings & Loan in Santa Ana, regard blacks and other minorities as their prime customers for home loans. Plaza advertises through minority media as much as in general circulation newspapers and radio stations, said Chairman John T. French.
Paula Richardson, a black Century 21 realtor in Brea, said she doesn’t see any bias among bankers. Many black applicants, she said, simply don’t make enough money to qualify for home loans.
“But I believe that if you can pay rent, you can make a mortgage payment,” Richardson said. The problem most often is getting over the hurdle of making a down payment, she said.
Jones asserts that the government must step in to allow 100% financing to those who are credit worthy and can show the ability to make mortgage payments. As it is, he said, many blacks feel they’re never going to own a house.
“I have a friend who has worked for the state 12 or 15 years and still lives from paycheck to paycheck,” Jones said. “He says he’s going to live in an apartment until he dies. He’s frugal; he doesn’t live lavishly. But he’s resolved himself to the fact that he’s never going to buy property.”
The Times survey, gleaned from government records, shows that blacks in Orange County applied for 838 loans out of a total of 75,299 loan applications made in 1990, the last year for which statistics are available.
Broken down, blacks accounted for 397 home purchase mortgage applications, 380 home refinance applications and only 61 home improvement loan applications. Broken down further among five income groups in each category, the numbers become so small that no conclusions could really be drawn.
In the aggregate, however, The Times survey found that:
* Blacks in Orange County were approved for home purchase loans 64.5% of the time, while whites were approved 72.8% of the time. The difference, 8.3 percentage points, is slightly higher than Los Angeles County’s 7.4-point difference, but half the nationwide spread of 16.8 points.
* Blacks in Orange County got 63.9% of their home improvement loans approved, while whites were approved 72.4% of the time. The difference of 8.5 percentage points is greater than Los Angeles County’s 5.3 points, but drastically lower than the nation’s 21.4-point differential.
* Blacks in Orange County won approval for refinance loans 64.2% of the time, compared to the 69.9% approval rate for whites. The 5.7 percentage point difference is higher than Los Angeles County’s 4.1-point differential, but much less than the nationwide total of 14 points.
Industry experts say they aren’t concerned with a difference of five points or less, but a difference of six to 12 points shows greater problems with possible discrimination. Any federally insured institution with a differential of more than 12 points in their loan approvals could risk sanctions by regulators under the Community Reinvestment Act.
A number of Orange County lenders are stumped about why there would be much of a difference between the approval rates for blacks and whites.
“Why there’s a difference, I just don’t know,” said Ronald McGee, California regional president for Household Bank, a Newport Beach savings and loan.
Since a 1989 federal law restructured the thrift industry and imposed heavy restrictions on operations, financial institutions have been scrutinizing loans more carefully. Many industry observers believe that the ongoing recession is a major result of the so-called credit crunch as lenders pull back on making loans that regulators might criticize and, instead, put their money in safe federal securities.
Prough said that weaker market values also have led institutions to curtail home equity and refinance loans.
Whatever the reasons, the sketchy statistics indicate that blacks take the brunt of the loan approval process.
Some blacks in the real estate industry think that the very laws aimed at helping them simply don’t work. Wayne Williamson, a commercial real estate broker in Santa Ana, doesn’t think that loan applications should even include boxes for marking the applicant’s race or nationality.
“I would never say that I was black in applying for a loan because there are absolutely no advantages in disclosing that, even though I am black,” Williamson said. “I can’t think of why in the world anyone would disclose it. Are you going to get some preference? Probably not, especially now with the negative stuff going on in L.A. over the riots.”
Hispanic and Asian surnames would be difficult to hide on an application, he noted, but “blacks like me are born in America and our names fit more with the mainstream.”
The federal statistics on loan approval rates is so sketchy on blacks in Orange County that even most businesses can’t rely on blacks to sustain them.
“There are so few blacks,” said Herbert J. Vinegar, a Century 21 realtor in Fullerton. “I represented only one black person in selling a home in the last year and one who tried to buy a home.”
Loan Approval Rates
Lower-income applicants in Orange County, no matter their race, had the least successful approval rates in 1990 for all three types of home loans. In all cases, though, whites had higher approval rates--sometimes by as much as 10%. In the refinancing and home-improvement loan categories, Asians and Latinos generally have less access to new money than whites. (Blacks filed only 61 applications for home improvement loans, and were omitted from the category.) Mortgage Loans Approved
Income Asian Black Latino White $35,000 or less 58.0% 52.4% 53.5% 62.1% $35,001 to $50,000 68.2 62.0 71.0 70.8 $50,001 to $75,000 71.3 70.8 76.9 76.1 $75,001 to $100,000 71.4 64.0 74.7 74.8 More than $100,000 67.4 62.7 65.2 71.4 O.C. Total 69.1 64.5 71.5 72.8 U.S. Total 75.8 63.1 70.2 79.9
Refinancing Loans Approved
Income Asian Black Latino White $35,000 or less 55.0% 63.2% 59.7% 67.2% $35,001 to $50,000 64.4 67.8 69.0 68.6 $50,001 to $75,000 65.0 61.7 67.4 72.9 $75,001 to $100,000 68.4 71.8 61.6 71.2 More than $100,000 60.4 58.4 63.7 67.5 O.C. Total 63.8 64.2 65.5 69.9 U.S. Total 68.2 61.8 65.0 75.8
Improvement Loans Approved
Income Asian Latino White $35,000 or less 49.1% 51.2% 61.4% $35,001 to $50,000 52.5 58.7 70.7 $50,001 to $75,000 66.3 67.3 75.1 $75,001 to $100,000 65.5 74.2 74.5 More than $100,000 59.9 69.4 72.4 O.C. Total 61.5 63.4 72.4 U.S. Total 66.9 60.9 78.7
Housing and Demographics
Blacks and Latinos have the lowest household income and home ownership rates in Orange County.
Asian Black Latino White Population 240,756 39,159 564,828 1,554,501 Median household income $46,139 $39,176 $35,905 $47,353 Occupied housing units 63,085 13,630 117,819 702,872 % home ownership 60.1% 28.1% 39.1% 62.2%
Applications Submitted
The percentage of home-loan applications from Asians and whites exceeded their share of the county’s population. Black and Latino applications lagged behind their respective percentage of residents.
Asian Black Latino White No. applications submitted 7,877 838 8,508 56,507 % of applications submitted 10.5% 1.1% 11.3% 75.0% % of population 10.0% 1.6% 23.4% 64.5%
NOTE: The Asian category includes Pacific Islanders, and the category for Latinos includes whites and blacks of Hispanic origin. Percentages may not add to 100% because of rounding. Source: 1990 census; census data programming by Maureen Lyons, Times statistical analyst; Orange County data provided by Dwight Morris, editor for special investigations, Washington bureau
