Magazine article American Banker

Biggest Calif. Lenders Made Few Mortgages in Poor Area

Magazine article American Banker

Biggest Calif. Lenders Made Few Mortgages in Poor Area

Article excerpt


California's biggest mortgage lenders made a total of 115,000 conventional home loans statewide in 1998 but just 400 in poverty-ravaged South Central Los Angeles, a nonprofit policy group complained Tuesday.

Seven of the eight banks and thrifts reviewed in a report by the San Francisco-based Greenlining Institute made fewer than 60 home loans last year in South Central, a 1.1 million-population section of Los Angeles. Wells Fargo & Co., for example, approved more than 21,700 mortgages for California homebuyers last year but just 22 in South Central, a ratio of about one in 1,000.

Washington Mutual Inc. was the only depository institution to make more than 60 conventional home loans to South Central residents, excluding refinancings and home equity loans. But only about 200 of its 32,800 California mortgages were made in the Los Angeles neighborhood, where almost everyone belongs to a racial minority.

"We don't think that it's due to deliberate discrimination" by loan officers, said Robert L. Gnaizda, Greenlining's policy director. "But if this was the plight of Wyoming, it would be front-page news."

Beverly Piraino, executive vice president for risk at California Federal Bank, said she had some doubts about Greenlining's numbers, which the nonprofit group said it obtained from the eight banks. "We're finding inaccuracies," she said.

But several companies on Greenlining's list acknowledged the difficulty of lending in South Central and said they are trying to do better.

Brad Blackwell, senior vice president for retail mortgage banking at Washington Mutual, said the thrift has a branch in South Central's Watts neighborhood and plans to expand a pilot program there that offers broadened underwriting guidelines for low-income and minority applicants. "I think you'll see in the year 2000 a much better result in ethnic/minority lending," he said. …

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