SAN FRANCISCO - BankAmerica Corp. disclosed Tuesday that its California unit sharply increased the number of home loans made to blacks and Hispanics in 1991. But the unit continued to turn down minority loan applicants far more often than whites.
The figures, coming amid widespread criticism that the banking industry is biased against minority loan applicants, were generally seen as a sign of progress for the nation's second-largest banking company.
Although California's economy is slumping, BankAmerica did better than most major banks in increasing the number of applications from and home loans to minorities.
Shock Waves Reverberating
Last year, when home loan data by race and income were first made public under the Home Mortgage Disclosure Act, the gap in rejection rates set off political shock waves and a spate of bad publicity for banks across the country.
Now updated figures have been released by a number o major banks, showing only slight improvement in the rejection rates among any of them.
Despite BankAmerica's progress, the gap between minority and white denial rates remained striking. The bank said it denied 42% of applications from blacks and 45% from Hispanics statewide in 1991, while turning down 29% of white applicants.
That meant applications from African-Americans or Hispanics were 50% more likely to be rejected than those from whites. That was somewhat better than than in 1990, when BankAmerica denied loans to the two minorities at a 60% higher rate.
The bank said its mortgage, refinance, and home improvement loans to black and Hispanic Californians jumped 21% in 1991. By contrast, home loans to whites rose 12.4%.
The jump in BankAmerica's home loans to minorities in California, plus the narrower. gap between minority and white denial rates, drew qualified praise.
|In the Right Direction'
BankAmerica is "moving in the right direction," said Gail K. Hillerbrand, San Francisco, a lawyer with Consumer's Union. "But we think there is a lot more to be done."
BankAmerica said the volume of home loans to minorities is rising even faster this year. The bank said it made more home loans to minorities in the first half of 1992 than in all 1991.
The increase is difficult to evaluate since heavy demand for refinancings has caused home loan origination to jump for borrowers of all races.
BankAmerica' attribute the higher home loan volume for blacks and Hispanics to outreach programs and changes in internal procedures put in place last year. Those efforts contributed to a 26.3% surge in home loan applications from blacks and Hispanics in 1991.
The company has aggressively promoted its Neighborhood Advantage program, which offers more flexible underwriting standards and reduced fees on home loans. The program is open to low-income customers and residents of lower-income neighborhoods, regardless of income.
Improvement Incentives
BankAmerica also began rewarding loan officers for originating home loans to minority and lower-income borrowers.
BankAmerica said it expects its programs to further trim the rejection rate gap. "The disparity will come down," said executive vice president Donald A. Mullane.
But Mr. Mullane said BankAmerica is cautious about some of the proposals made by advocates. Those include teaming bank loans with government subsidies, keeping more mortgages on the books instead of selling them to investors, and finding substitutes for standard mortgage insurance.
"What we're not open to is reducing underwriting standards to the point that delinquencies rise too much," Mr. Mullane said.
