Report Shows Fewer Home Loans for Latinos

Conventional home loans to middle-class Latinos earning $55,000 or more in Los Angeles County shrank by 7% from 1995 to 1998, while comparable loans to whites skyrocketed by 85%, according to a report to be released today by a coalition of community and business organizations.

The San Francisco-based Greenlining Institute issued its assessment of conventional home loans to Latinos on the heels of a report last month on African Americans that showed similar results.

Greenlining policy director Robert Gnaizda stressed that the discrepancies were not due to discrimination, but to problems with outreach, rigid credit standards, steep housing costs and aggressive marketing by “unscrupulous” sub-prime lenders.

Nevertheless, the statistics are “damning,” Gnaizda said, because Latinos make up 46% of the population in Los Angeles County and 30% statewide.

The report drew on Federal Reserve data to assess all regulated and unregulated lenders statewide and in Los Angeles County. It excluded data on government-backed loans, for which it says terms are generally less favorable for borrowers and which cannot be used to meet banks’ community reinvestment goals.

The report also looked at the 1998 lending records in South-Central Los Angeles, Los Angeles County and statewide of the state’s eight largest banks: Washington Mutual, Cal Fed, Bank of America, Sanwa Bank, Union Bank, Citibank, Wells Fargo and World Savings.

In South-Central, whose 1.1 million population is mostly Latino and African American, the lenders made 139 loans to Latinos overall, 55 of them to Latinos earning $35,000 or less. Countywide, they made 3,582 total loans to Latinos, 1,038 to Latinos earning $35,000 or less.

Data released in the report on Wells Fargo’s lending included activity from the latter part of 1998 only and noted “substantial improvement” in 1999. But Wells Fargo spokeswoman Kathleen Shilkret criticized the report for excluding government-backed loans, which are designed for lower-income home buyers.

Still, the figures are noteworthy because lending to lower-income whites grew significantly faster between 1995 and 1998 in the state and county, indicating a strong market of low-income home buyers. For Latinos earning over $55,000, the discrepancies were even greater: The number of loans to Latinos countywide dropped from 5,022 in 1995 to 4,677 in 1998, while for whites they nearly doubled from 19,660 to 35,732.

Gnaizda said the gap is due in part to the fact that more Latinos are clustered near the $55,000 income level while more whites are earning substantially more and have greater access to the pricey housing market.

The report recommends that the secretary of the Treasury and Federal Reserve chairman develop a tax incentive program that would slash the cost of housing in low-income areas. It calls on the Federal Reserve Bank of San Francisco to develop a five-year plan to address the ethnic divide and asks lenders to set quotas for loans to minorities.

Furthermore, it calls on all lenders to emulate Bank of America’s zero-down-payment program, launched in mid-1998 along with a flexible credit program. The report showed Bank of America making 136 loans to low-income Latinos and 467 loans to all Latinos countywide. But BofA spokeswoman Lisa Margolin-Feher said the numbers increased notably in 1999 as a result of the programs, and creation of a South-Central office and Watts Home Ownership Center. As of Nov. 30, BofA loans to all Latinos in Los Angeles had increased by 60% over 1998 totals, she said.

Strongly leading the pack of eight lenders was Washington Mutual, with 95 of the total 139 loans to Latinos in South-Central, and 1,668 of the 3,582 loans to Latinos countywide. The lender also led strongly in loans to lower-income Latinos.

Washington Mutual officials said the figures were the result of targeted outreach to Latinos.