No Gains Seen on Minority Lending : Mortgages: A report by the Federal Reserve finds no significant progress last year despite industry efforts to make loans more available.

The nation’s financial institutions continue to reject home mortgage applications from blacks and Hispanics far more often than from whites and Asians, the Federal Reserve Board reported Tuesday in its second annual report on lending patterns.

The rate of rejection for all ethnic groups was somewhat higher last year compared to 1990 because the recession caused bankers to be more skeptical in approving loan applications, according to the Fed.

Overall, the Fed’s study of lending by race and ethnic group revealed about the same rejection patterns last year as in 1990. Even at high income levels, blacks and Hispanics were more likely to be rejected for home loans than the other groups.

The rejection rates for those seeking conventional home loans last year were 15% for Asians, 17.3% for whites, 26.6% for Hispanics and 37.6% for blacks. In 1990, the figures were 12.9% for Asians, 14.4% for whites, 21.4% for Hispanics and 33.9% for blacks.

“We now have pretty uncontestable evidence that mortgage discrimination is in fact a problem,” said Deepak Bhargava, legislative director for the Assn. of Community Organizations for Reform Now, a community group involved in affordable housing issues.

But industry groups said that banks and thrifts are working hard to improve their lending records and ensure that bias does not come into play when making loans. Last year, the groups maintained that the Fed study did not prove discrimination.

The American Bankers Assn. said its new Center for Community Development will help banks “include more potentially credit-worthy borrowers without taking excessive risk, educate and help more consumers become credit-worthy and see that such changes are incorporated throughout the mortgage process.”

The ABA said it has “urged our members to carefully review their loan processes to eliminate any possibility of unintentional barriers to minorities seeking mortgage loans and ensure equal treatment of all applicants.”

Paul Schosberg, president of the Savings & Community Bankers of America, the major S&L; trade group, said: “More needs to be done to ensure that mortgage credit is available to all segments of American society on a fair and equitable basis.”

Last year’s Fed report gave substantial statistical ammunition to critics of the lending industry because it marked the first time that banks and thrifts were compelled to report publicly on mortgage lending among ethnic groups.

Bankers, under sharp criticism from some members of Congress and community groups, pledged special efforts to make loans available to members of minority groups. Federal regulators said they would scrutinize bank activities much more closely.

Even more pressure was applied on the industry by a recent Federal Reserve Bank of Boston study that said disparities are prevalent among lenders in its region even when factors other than income, such as collateral available and credit history, are considered.

A recent Times study of mortgage lending in Los Angeles County during 1990 showed wide disparities among racial and ethnic groups. Asians had the highest approval rate of any group, and the gap between black and white acceptance rates was only half the national discrepancy. The competitive nature of the Los Angeles market, with strong S&Ls;, and the relatively low level of residential segregation compared to other cities, contributed to the smaller lending differentials, according to industry experts. Major California lenders’ reports for 1991 also showed wide variations in approval rates:

* Bank of America’s denial rate for home mortgages was 25.8% for whites, 27.6% for Asians, 41.1% for blacks and 47% for Hispanics.

* Wells Fargo, which grouped together applications for home mortgages, refinancing and improvements, had denial rates of 55% for whites, 64% for Asians, 70% for Hispanics and 74% for blacks.

* Great Western Bank, which has focused much of its lending efforts on Los Angeles’ inner city neighborhoods, had denial rates of 11.9% for whites, 12.6% for Asians, 14.5% for Hispanics and 18.2% for blacks.