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The Color of Money

Editorials and Letters

Whites are being hurt too by banks' loan practices

By Tom Teepen, The Atlanta Constitution

Published May 12, 1988, Page A23

Copyright 1988, The Atlanta Journal-Constitution

White folks throughout metropolitan Atlanta are being hurt because Atlanta's banks are making far fewer home mortgage loans to blacks than to whites with comparable incomes in comparable neighborhoods. That's right; white folks are being hurt.

Fairness alone would be reason enough to clamor that the inequity be ended. Fairness can be a stern discipline, but our license to be human comes with the condition that we work for it even so.

One need not, however, cite fairness as the only reason whites should care about the fact that blacks are being jerked around. The practice hits whites right where it hurts most -- a bull's eye on the pocketbook: When blacks cannot secure the same kind of home financing whites can, whites wind up with less money to spend.

Oh, yes, they do.

As recent Journal and Constitution reports made painfully clear, blacks believe -- and believe with apparent good cause -- that they are far less likely than whites with the same incomes to receive loans from Atlanta banks to buy homes or to repair or improve homes.

As a consequence, some resign themselves to a lifetime of renting, a rational choice for some people in some circumstances but one that by definition means the renter won't build up equity in a home, the basis for the family assets of most Americans.

Other blacks wind up funding their home buying or improvements through finance companies whose rates can cost the borrower two or even three times as much in repayment as a bank loan would require.

The ability of such borrowers to participate in the general economy is sharply reduced as result. They can afford fewer meals out, fewer purchases at department stores, less new furniture and so on.

Dollars that would otherwise be circulating to the benefit of everyone instead are sucked down a sump of repayment rates that are legal but hardly conscionable.

Worse, because blacks to a large extent are outside the usual bank mortgage system, they are vulnerable to predators who, offering to do them a favor by arranging a loan, lead them to outfits that fleece them till they bleed.

It is an open secret in mortgage and real estate circles that some realtors get kickbacks for delivering victim borrowers, disproportionately black, to sharpies who mug them with outsized rates.

Atlanta banks maintain fewer branches in black neighborhoods than in white ones of similar income levels. Property appraisers typically discount the value of homes in black neighborhoods. Loan originators generally fail to scramble for customers in black areas.

Cumulatively, such oversights and slights reduce the financial capacity of families in black neighborhoods below the financial capacity of whites with the same incomes.

And when the financial capacity is diminished, the ability to act in your own financial self-interest is circumscribed. Family capital is cramped, or missing altogether, and it is tough to get ahead and difficult to build a substantial inheritance for your children.

The housing patterns of metro Atlanta are largely defined by race. Let's not kid ourselves about that. Whites often think as a result that they are "safe" from the financial drag that works on some black neighborhoods.

But they are not harm-free. The whole economy is undermined and restrained when any large group in it is arbitrarily rendered incapable of participating as fully as it could.

An accountant in Sandy Springs passes up a car phone, a shop owner in Cobb settles for Jekyll Island instead of Hilton Head for a vacation and a housewife in Dunwoody decides she must live another year with the old couch -- all because families they don't know, in quite a nice neighborhood in Southwest Atlanta, aren't getting bank loans.

The old saw is true. We really are all in this together. The point is lost on whites at their own peril.


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Reprinted with permission from The Atlanta Journal and The Atlanta Constitution. Further reproduction, retransmission or distribution of these materials without the prior written consent of The Atlanta Journal and The Atlanta Constitution, and any copyright holder identified in the material's copyright notice, is prohibited.


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