The peaceful community envisioned by Martin Luther King Jr. is still just a dream for millions of black Americans, and the chilling findings of a new national study of home-loan applications help to explain why.
A quarter of a century after the late Rev. King described the black ghetto-dweller living on a "lonely island of poverty" as an "exile in his own land," black families are still denied the chance to accumulate wealth in the most fundamental way.
Blacks applying for home loans are rejected more than twice as often as whites, according to an Atlanta Journal-Constitution analysis of the last five years of loan data from America's 3,100 savings and loan associations and mutual savings banks.
Redlining -- refusing to lend in black and declining neighborhoods, often the only ones minority families can afford to buy into -- appears to be on the rise.
In fact, the lending gap is so wide and so pervasive that, in much of the country, high-income blacks are rejected at the same rate as low-income whites. Race is a better predictor of a loan application's success than sex or marital status.
These findings are alarming for several reasons:
First, because they bear out similar, earlier findings in Atlanta and Boston, demonstrating that although regional differences exist, the odds are against home ownership by blacks nationwide.
Second, because credit discrimination against people who can't borrow money to buy or fix up houses contributes to neighborhood decline, causing property values to stagnate or plummet in a vicious cycle.
Third, because home ownership is the American way -- the principal way -- of gaining a foothold in a community, creating a legacy for one's children and building an asset against which to borrow for education, vacations, emergencies and retirement. Yet it has not been within reach of all Americans, and the gap appears to have widened in the post-civil-rights era, as federal regulators have decreased their enforcement of fair-lending laws.
The Reagan administration reduced the number of examiner hours devoted to consumer regulations, including fair-lending laws, by 74 percent during its first term. The Federal Home Loan Bank Board, which regulates savings institutions, collected data it never bothered to analyze. And, though regulators reported declines in lender compliance with technical aspects of the Equal Credit Opportunity Act, they have not referred a single case of credit discrimination to the Justice Department for prosecution since 1978.
Racial bias may not be the only explanation; the study data revealed nothing about the debt burdens or credit histories of loan applicants. But, lenders admit, clearly unqualified applications tend to be weeded out by realtors before lenders see them.
Pressure is building in Congress for a Justice Department investigation of the racial disparities, and one is warranted. But Justice itself has been accused of dragging its feet. What is needed most is an unequivocal commitment from the highest ranks of the new administration to enforce the fair-housing laws and write new ones, if necessary, to put an end to discriminatory lending practices.Go to the next article or back to the Color of Money index or Power Reporting
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