U.S. Reviews Mortgage Practices at Illinois Bank : Finance: Northern Trust is third bank to be targeted by Justice Dept. for possible bias.

Northern Trust Corp., a major Illinois banking company, said Wednesday that the mortgage practices of its four subsidiaries are under review by the Justice Department for possible lending discrimination against minorities.

Northern Trust is the third banking company to acknowledge it has been targeted by the Justice Department for allegedly discriminating against minorities in mortgage lending.

The two other banks are Shawmut National Corp. of Boston and Barnett Banks Inc. of Jacksonville, Fla. Separately, Fleet Financial Corp. of Providence, R.I., was investigated on similar charges by Georgia’s attorney general.

At the request of the Justice Department, Northern Trust is compiling thousands of home mortgage applications that it received between 1990 and 1993, according to company spokeswoman Sue Rageas.

Northern Trust officials, who were first contacted by the Justice Department in mid-November, met with department officials Dec. 15, she said.

So far, no charges have been filed against the bank over its lending practices.

“There have been absolutely no allegations of wrongdoing,” said Lorraine Reepmeyer, senior vice president and community reinvestment officer for the bank.

Banks have come under close scrutiny because government figures have shown that mortgage lenders rejected applications from blacks at more than twice the rate of those from whites in 1992.

The Justice Department, which has made preventing bias in lending a top priority, is investigating a number of institutions for possible discrimination, officials said.

The Clinton Administration has also stepped up efforts to funnel more credit to poor neighborhoods and rural areas. It has proposed rules to prod banks to make more loans, open more branches and invest more dollars in low-income communities that have been starved for credit and basic banking services.

Reepmeyer said the Justice Department’s inquiry is based on data that Northern Trust submitted under the Home Mortgage Disclosure Act and not because of any allegations made by an applicant.

While the data reveals the race and income level of applicants who are accepted or turned down for loans, the credit factors that go into those decisions are not included, Reepmeyer said.

“That’s part of the problem,” she said. “These types of statistics can be misleading.”

Defending its lending practices to minorities and low-income families, Northern Trust said it has more than 30 programs targeted to affordable single-family homeownership. It also has several programs to help minority applicants through the loan process, it said.

From 1991 to 1992, the number of loans to minorities by its Northern Trust Co. subsidiary through these and other programs increased 71%, while the number of applicants increased 67%, the bank said.

By the end of 1993, the bank expects to have more than $60 million in outstanding loans under these programs and plans to increase this lending by $25 million in 1994, Reepmeyer said.

Northern Trust owns four bank subsidiaries in the Chicago area: Northern Trust Co., Northern Trust Bank/DuPage, Northern Trust Bank/Lake Forest N.A. and Northern Trust Bank/O’Hare N.A.