When he went to the banks last year looking for campaign contributions for his 1989 race for mayor, Michael Lomax picked up a donation from every one. He wishes he'd done as well when he wanted a loan.
The Fulton County Commission chairman says he had to go to three banks last year to get a loan to add a guesthouse in Adams Park, an upper-middle-class black neighborhood in southwest Atlanta.
"The first reaction from the bank was, `Why do you want to invest that much money in that neighborhood?' But that's the neighborhood my house is in.
"If I, a powerful black elected official, can't get a loan, what black person can?"
James Fletcher said he couldn't -- at least not from a bank. The 56-year-old retired Southern Railway laborer needed a $5,000 loan to fix his roof. He owned the house in Mechanicsville, a lower-income black neighborhood in southwest Atlanta.
Fletcher went in 1984 to Citizens and Southern Bank (C&S), his bank for 10 years.
"They said they didn't make no house loans. They didn't let us fill out the papers."
So he and his wife, Lizzie Mae, went to Atlantic Mortgage Co., which loaned them $5,773.69 at 18 percent interest -- plus $3,180 in "discount points" and other add-ons, raising the effective interest rate to 27.1 percent, according to the loan papers.
Total payback: $30,722.30.
If C&S had made the loan, at its usual terms of 15 percent interest with five points over 10 years, the Fletchers would have paid back $11,764.82.
Fletcher discovered the size of his debt two years after getting the loan. He had paid about $4,000 and took another couple of thousand in to pay off the rest.
"I don't know exactly how the thing went, but when they got through with it, it was $30,000," he said. "I guess they can get by with it."
A spokesman for C&S, Dallas Lee, confirmed that Fletcher had been a depositor, but said he could find no record that Fletcher had ever applied for a loan. "It seems highly unlikely (that he would be discouraged from applying). We make a lot of home-improvement loans," Lee said.
But C&S made no home-improvement loans, and no home-purchase loans, to the 244 single-family structures in Mechanicsville from 1984 to 1986, according to federal lending records.
Michael Lomax and James Fletcher are at opposite ends of the same boat. The Atlanta Journal-Constitution's study of lending in metro Atlanta found that banks and savings and loan associations rarely lend to black neighborhoods, from the lowest-income to the highest, from Mechanicsville to Adams Park.
Lomax said he hadn't thought he'd have any trouble finding a lender when he started planning a renovation.
"I had remarried, and we decided we wanted to stay in the house. I wanted to add 1,400 square feet in a free-standing building -- a guesthouse where we can put people up and I can go hide and where we can entertain. We also were adding air conditioning in the house, a new septic tank field and some landscaping."
An associate professor of literature at Spelman College and one of the two leading candidates for mayor of Atlanta, Lomax has a family income "between $50,000 and $100,000 a year . . . and I pay my bills." He also has money in the bank but declined to provide specifics.
Lomax wouldn't name the banks that turned him down, but he did say one of them was where he had banked for 25 years.
County deed records show he received the loan from First Union Bank for $115,2 00. Lomax said he has the ability to pay the money back, although he may never recoup his investment.
"My home to date does not appraise for the amount I've invested in it. I find that extremely frustrating and somehow just plain wrong. I'm not doing anything different from what people do in Morningside or Peachtree Park. You drive through Peachtree Hills and you'll see the exact same houses as in Adams Park, but they're appraised at a third more because white people live in them. Perhaps I'm wrong, but I think I've done the right thing. Since I made my investment, three other homes on my block are being added to."
Banks and savings and loans lend less often in Adams Park than in white neighborhoods of similar household and housing growth, according to real estate records studied by The Journal-Constitution.
In 1986, banks and savings and loan associations financed 17 percent of the home purchases in the census tract that roughly corresponds to Adams Park. They financed 37 percent of the home sales in comparable white neighborhoods.
Banks sometimes make home-improvement loans for more than $120,000 in Southwest Atlanta's highest-income black neighborhoods -- at least, the black-owned banks do.
According to federal lending records for 1986, the black-owned Citizens Trust Bank made a home-improvement loan for $156,000 off Cascade Road near Lomax's neighborhood. Black-owned Mutual Federal Savings and Loan made one in the same neighborhood for $144,000, in integrated East Point for $134,000, and in integrated southwest Fulton County for $175,000.
No white-owned institution reported a home-improvement loan of more than $120,000 in a predominantly black neighborhood in 1986. They did make much larger home-improvement loans in more affluent white neighborhoods. For example, in 1986, Citizens and Southern made home-improvement loans in Peachtree Heights for $250,000, in Druid Hills for $128,000, and in north DeKalb for $133,000.
"If my house were lifted up and put into any neighborhood in northeast Atlanta, with my family income I would have absolutely no difficulty getting a loan to rehab my house," Lomax said. "But I don't want to move. I like my acre of land and my little bungalow. I can look out my window on a park and a golf course behind it.
"What I tried to explain to the lenders was, I'm pioneering. It's an economically mixed neighborhood, but our income levels in Adams Park are higher than some of the intown neighborhoods where they make loans. On my street are the senior black executive at Coca-Cola, myself, two architects and at least one lawyer. We are restrained by the financial institutions from improving our neighborhood."
Lomax attributed his rejections to lack of understanding by bankers.
"I think that, for most Atlanta banks, black continues to equal high risk in their perceptions. It's an educational issue that we need to work on. In the 19 70s they didn't want to lend in Virginia Highlands and Morningside, either. They learned they can make money there.
"If we want to see balanced residential development on the Southside, the banks are going to have to evolve aggressive programs to assist black families in acquiring property. Central Atlanta Progress encouraged such a program for Inman Park and Virginia-Highland. Where is the comparable program on the Southside? I think it's in the best interest of the banks to support that. We want a city of strong neighborhoods where home values increase and not decrease."
Lomax says he isn't mad at bankers and doesn't want to increase regulation of them. He even invited several senior bank executives to his Christmas party, the one he threw in his new guesthouse.
"The ones who came to the party weren't loan officers."
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