Last summer, after a series of newspaper articles about racially unequal patterns in home mortgage lending, several black real estate agents and five white bankers met one morning to discuss what could be done.
The bankers, shaken by the bad publicity, were eager to reach out to the black community. But what struck Miller Johnson Jr., a broker with Citywide Realty Associates Inc., was that they had very little idea how to do it.
"They didn't know where the Atlanta Daily World was. Now, how were they going to reach blacks without advertising in a black newspaper? I told them (it was on) Auburn Avenue, and one asked where that was," Mr. Johnson said. The street, historically the spine of black commerce in Atlanta, was a block from where they were sitting, in the First American Bank's Peachtree Street office.
The past year has been an education for Atlanta's lenders. Since May 1988, when The Atlanta Journal-Constitution reported that whites received five times as many home loans from Atlanta's banks and savings and loan associations as blacks of the same income, lenders have taken a number of steps toward better serving the black community.
Through four special lending programs, nine banks have lent nearly $45 million to more than 850 homebuyers in targeted low-and moderate-income areas. The $20 million Atlanta Mortgage Consortium (AMC), one of the largest lending pools, has hired a black-owned public relations firm. Several of Atlanta's majority-owned banks have had their first meetings with the all-black Empire Real Estate Board and have acted on some of its recommendations. One bank sent its employees on a guided tour of the mostly black Southside and adopted a blighted neighborhood, Pittsburgh.
Atlanta's politicians, real estate brokers and housing activists applaud the efforts. The Rev. W. Craig Taylor, a non-profit housing developer who was among the banks' harshest critics a year ago, said, "I can't say enough good about the banks in terms of their response. I've said it across the country: We have the best mortgage lending program in the United States."
But there is also general agreement that much is still undone.
"They've got a long way to go before they're going to turn around hundreds of years of not dealing with the black community," said Franklin F. O'Neal, a black businessman and the Southside specialist for the Chamber of Commerce.
Rev. Joseph E. Lowery, president of the Southern Christian Leadership Conference, agreed. "The consortium is a good idea that's poised to move in the right direction," he said. "But so far, it looks like a vaccination that didn't take. They need a booster shot."
Last week, when the AMC held a news conference to assess its first year, bank officials agreed the $20 million reduced-interest lending program is "barely scratching the surface" of the need for affordable mortgage financing. Jim Mynatt, the AMC president and first vice president at Trust Company Bank, said the program needs a surge of public and philanthropic funding in order to lower interest rates even more.
"Our current program does not provide the solution to the affordable housing dilemma," Mr. Mynatt said, adding that the AMC is considering expanding its current single-family lending program to find creative ways to fund multifamily units by taking advantage of federal tax credits.
Part of the impetus for such continued creativity is the Community Reinvestment Act (CRA), which says banks and savings and loans have "continuing and affirmative obligations to help meet the credit needs of their local communities, including low-and moderate-income neighborhoods, consistent with safe and sound operation."
Then, too, there is the fact that all 64 banks and savings and loans in metropolitan Atlanta remain the focus of an ongoing U.S. Justice Department inquiry into possible racial discrimination in mortgage lending. The ongoing Civil Rights Division probe was initiated in the wake of the newspaper reports.
Consistently, banks and savings and loans have maintained that the relatively low number of home loans to blacks was unintentional. Some in the black community have asserted otherwise, arguing that race -- not home value or household income -- consistently determined the lending patterns of metro Atlanta's largest financial institutions.
"They have steadfastly denied that there was any racial discrimination," the Rev. Lowery said. "In my tradition of faith, the first step is to confess your sins. Then you can repent and be forgiven and start all over again. But it's hard to cure a disease when you won't accept the fact that you have it."
In March, the Fair Lending Practices Action Committee organized by Atlanta City Council President Marvin S. Arrington issued its report. Among other things, it called for the formation of a 10-year, $500 million mortgage consortium, a pool of minority business loans and more minorities in bank management. Mr. Arrington said that Atlanta's lenders have not yet formally addressed the recommendations.
"They made a bonafide effort," he said of the banking community. "But it could have had broader scope and application."
Lenders point out that the law does not require them to lose money.
"There is a feeling on the part of some well-intentioned minority spokesmen that, based on past injustices to certain groups or classes, a financial institution should tailor-make substantial programs at a not-for-profit basis," David C. Swann, executive vice president at First Atlanta Bank, said recently. "But there is still nothing in the CRA that says a bank should do anything that is unsound or unprofitable."
So far, the special lending programs have not lost money. In fact, they are generally outperforming conventional home loan portfolios.
But banks say they anticipate problems when they try selling the loans, as has been recommended by the Federal Reserve Bank. The regulatory agency considers the loans too risky for a bank to hold until maturity. Given current conditions on the secondary market, the AMC could sell its $20 million loan package for only $17.6 million.
Still, many see an enduring commitment among some lenders. Jon Abercrombie, executive director of Charis Community Housing, a non-profit homebuilder, said, "I suspect not all of the banks are committed to serving the poorer communities, but some seem to be making a sincere effort not just to lend money, but to not let the program fail."
Lenders say they believe a majority of loan recipients are black. Only C&S, which has already distributed all of its $10 million home-purchase loan pool, has kept a tally. Of its 205 mortgage-holders, 58 percent are minority and 42 percent are white, according to a spokesman. Trust Company Bank, First Atlanta and the AMC had no records available, but spokesmen predicted similar ratios.
Loan recipients say their lives have changed. Johnnie Roland, a 44-year-old medical assistant at Georgia Tech, had tried to borrow money to buy a home once before, but was rejected because of her small annual income: $12,884. Last month, she closed on a $38,000 loan and bought the two-bedroom brick house she had been renting in southeast Atlanta. Her mortgage payment is $388 a month -- $60 less than she had paid in rent.
"It was easy," she said of her experience with an AMC loan obtained through Fulton Federal Savings and Loan. "Now I don't have to pay someone else's mortgage."
In general, there have been as many loan applicants rejected as accepted. Maurice Dukes has seen a lot of rejections, usually for credit reasons. The owner of a small Lithonia real estate firm, she has committed hundreds of hours to promoting the AMC program. She and her eight agents attended about 50 informational meetings with potential clients. They spent 240 hours working with applicants. And so far, Mrs. Dukes said, only one of her clients has received an AMC loan. Another four received House Money loans from Trust Company.
In several instances, she said, clients who had been rejected by the consortium won financing from mortgage companies. "When you're seeking to lend money to those people who have been disenfranchised, you've got to realize that many of those people have had credit problems," said Mrs. Dukes.
If they have not been the panacea that some had hoped, the special loan programs do appear to have noticeably narrowed the gap between bankers and black leaders. Thanks in large part to a community outreach program fashioned by the AMC's black-owned public relations firm, Paragon, white loan officers have begun to visit black churches, black professional organizations and neighborhood planning unit meetings to talk about lending.
"To remove the fear of the big bank bugaboo -- that was the whole idea," Lou Walker of Paragon said of his person-to-person marketing plan.
As awareness grows, many hope that attitudes will change. "Every time I've brought the subject matter up, people have talked about it," said Mr. Arrington. "They have not just summarily dismissed it. My contention has been from day one that as long as we can keep the lines of communication open, that we're going to do something."
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