Sears Hiring Civil Rights Group to Scrutinize Its Lending for Bias

By Cummins, Claudia | American Banker, August 10, 1993 | Go to article overview
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Sears Hiring Civil Rights Group to Scrutinize Its Lending for Bias


Cummins, Claudia, American Banker


WASHINGTON -- Sears Mortgage Corp. is planning to hire a civil rights group to help stamp out any racial bias in its huge lending operation.

The pending deal between Sears, the nation's seventh largest mortgage originator, and the National Fair Housing Alliance, a Washington-based nonprofit organization, is a potent example of the growing cooperation between lending institutions and their former adversaries.

The alliance's members have filed lending discrimination suits against a number of banks.

Recently, it won a contract worth around $1 million from the Department of Housing and Urban Development to look for lending bias by mortgage lenders in three undisclosed cities.

8 Months of Negotiations

The program being discussed would include a review of Sears' underwriting guidelines and application procedures, lengthy training of loan officers and others that come into contact with the application, and testing.

Sears and the alliance have been negotiating the contract for about eight months. All that remains is for it to be signed, said Shanna Smith, director of programs at the civil rights group.

Sears spokesman Larry A. Costello confirmed that the two groups are negotiating, but declined to comment on specifics.

|High Credibility'

Sears chose to work with alliance, he said, "because they are known for their high credibility and professionals approach."

Sears Mortgage Corp., headed by Walker Klein Jr., was the seventh largest mortgage originator in 1992. The Vernon-Hills, Ill.-based company funded $5 billion in residential mortgages in the first half of the year. PNC Bank Corp. announced in May that it plans to buy the company and close the deal by yearend.

The National Fair Housing Alliance, a network of about 60 grass-roots fair housing groups around the country, is the only national advocacy group that focuses exclusively on education and enforcement of fair-housing laws.

Based in Washington, the three-year old network has worked closely with the Department of Housing and Urban Development in its efforts to deter discrimination in all aspects of housing, including lending.

Works Closely with HUD

The alliance investigated homeowners insurance companies for HUD. It also has worked closely with HUD as the department develops a specialized unit that will focus exclusively on lending discrimination.

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