A report to be released today by the San Francisco-based Greenlining Institute reveals that major banks are falling short on conventional home lending to African Americans statewide regardless of income level. But they lag most severely in home loans to lower-income blacks in South-Central Los Angeles.
The state's eight largest banks made only 26 conventional home loans in 1998 to South-Central Los Angeles African Americans earning $35,000 or less. Meanwhile, the nonprofit Operation Hope brokered nearly twice as many such loans, indicating that a market for such products exists, according to the findings.
The report concludes that the disparities are not due to direct discrimination by lenders. Rather, the coalition of church, consumer, civil rights and small-business groups attributes them to poor outreach by big lenders, adherence to unnecessarily strict credit standards, aggressive marketing by "unscrupulous sub-prime lenders" and the high cost of housing, among other factors.
Bank officials reached Tuesday said the lending gap to African Americans was undeniable and is being addressed through a range of outreach programs. However, several officials criticized the report for not including government-insured loans in the tally.
The study comes on the heels of a Department of Housing and Urban Development report that found minorities were less likely than whites to obtain mortgage financing and, if successful, tended to receive less favorable terms. Another national study released last month by the Assn. of Community Organizations for Reform Now found that the share of conventional mortgages to African Americans and Latinos has been eroding since 1995, with lending to whites growing substantially faster.
Even though "it's not caused by direct discrimination, it is still a problem for American society to have a racial gap in homeownership," Greenlining's policy director, Robert Gnaizda, said.
The report, based on Federal Reserve data, found that all lenders lagged in conventional home loans to African Americans statewide and in Los Angeles County. Statewide, the number of such loans grew 19% from 1995 to 1998, compared with 51% for whites. In Los Angeles County, such loans increased 13%, compared with 52% for whites.
Discrepancies were apparent even for more affluent home buyers. Statewide, conventional loans to higher-income blacks increased 18% in the three-year period, compared with 43% for whites. In Los Angeles County, such loans to affluent blacks inched up 7%, compared with 44% for affluent whites.
