Magazine article American Banker

Mortgage Lenders' Grades Show Need for Extending CRA, Activist Group Says

Magazine article American Banker

Mortgage Lenders' Grades Show Need for Extending CRA, Activist Group Says

Article excerpt

WASHINGTON -- Mortgage companies are doing a much worse job than banks in extending home loans to minorities, according to a study released Tuesday.

The study, commissioned by the National Community Reinvestment Coalition, found that 70% of the 126 "worst" lenders in 1993 were mortgage banking companies. Just under 30% were commercial banks and less than 1% were credit unions.

"This study says very clearly that mortgage companies, which have to report data under the Home Mortgage Disclosure Act, should be covered by" the Community Reinvestment Act, NCRC chairman Irvin Henderson said.

Earlier this year, a House subcommittee held hearings on that issue, but no legislation resulted.

The NCRC graded financial institutions on five indicators, group president John Taylor said. It awarded grades from A+ to F- for: marketing to minorities; minority-to-white denial ratio; lending to minorities; marketing to low-income and moderate-income applicants; and lending to low-income and moderate-income applicants. The group then averaged the grades for a final score.

The group, which relied on HMDA data, compiled the list of 126 "worst" lenders after examining major lenders in the 20 largest U.S. markets.

The group rated Prudential Home Mortgage Co. as the single worst lender in 1993. It said Prudential received failing grades in 18 markets.

Rounding out the list of the group's worst lenders were: GE Capital Mortgage Services, with eight failing grades; Country-wide Funding Corp., with seven failing grades; Chase Home Mortgage Co., with six failing grades; and Chase-owned American Residential Mortgage, with five failing grades.

Prudential senior vice president Doug Rossbach said the company didn't originate loans on its own in 1993. …

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