Study: Blacks Still Most Likely to Be Rejected for Home Loans

Despite an anti-discrimination crackdown by the Clinton Administration, mortgage lenders continue to reject black applicants more than twice as often as whites with similar incomes, according to a regulatory report released Wednesday.

According to the data for 1993, banks, savings institutions and credit unions turned down 34% of mortgage applications received from blacks, 27.8% from Native Americans, 25.1% from Latinos, 15.3% from whites and 14.6% from Asians.

This is the fourth year the data has been released by the Federal Financial Institutions Examination Council, a coordinating body for five federal regulatory agencies.

The rejection pattern in the latest report differs little from that of the first year, 1990, when 33.9% of blacks were turned down, 22.4% of Native Americans, 21.4% of Latinos, 14.4% of whites and 12.9% of Asians.

And, as in past years, the disparity in rejection rates for whites and blacks in 1993 remained wide even when the data was adjusted for income.

For low-income applicants--those with less than 80% of the median income in their areas--the rates were: blacks, 32.3%; Latinos, 28.6%; Native Americans, 27%; whites, 19.3%, and Asians, 16%.

Rejection rates for applicants with more than 120% of the median income were: blacks, 18.2%; Latinos, 17.1%; Asians, 13.7%; Native Americans, 13.6%, and whites, 7.9%.

Donald G. Ogilvie, executive vice president of the American Bankers Assn., said the data is “at best a flawed measure” of his industry’s commitment to fair lending. Although the report groups applicants by income, it does not take into account such factors as previous indebtedness and credit records.

Ogilvie said that despite the still divergent rejection rates, the actual number of applications and approved loans increased more quickly for blacks and Latinos than for whites. He attributed that both to bankers’ efforts and to low interest rates in 1993, which made home purchases more affordable for first-time buyers.

The association is getting ready to send each of its members a “Fair Lending Toolbox” containing information on how to improve their lending records.