The Justice Department on Tuesday settled accusations against a New Mexico bank it charged with discriminating against Hispanic consumers who applied for loans to buy mobile homes.

First National Bank of Donna Ana County agreed to a $585,000 settlement. The bank will spend $485,000 to reimburse loan applicants who were improperly denied credit and $100,000 to subsidize loans for mobile homes purchased by Hispanic consumers.

The $341 million-asset bank did not admit to any wrongdoing, but it agreed to institute a fair-lending compliance program and to conduct home- buying seminars in the Las Cruces, N.M., area.

"The bottom line in that litigation is very expensive," said Ben H. Haines Jr., president and chief executive officer of First National. "We felt it was in the best interest of all parties involved to get the case behind us."

The case is the first involving mobile home purchases and the first alleging discrimination solely against Hispanics. It is the 12th fair lending case brought by the Justice Department since 1992.

Paul F. Hancock, chief of the housing section at the Justice Department, said the case should remind lenders that the government remains interested in loan underwriting practices.

"It is important that we continue to look at the underwriting of loans," he said. "We know from Home Mortgage Disclosure Act statistics that African-Americans and Latinos are rejected twice as much as whites."

The complaint charged that First National rejected Hispanic applicants while approving white borrowers with similar credit histories.

It also alleged that loan officers gave whites more opportunities than Hispanics to explain past credit problems, and that they made greater efforts to verify outside income earned by whites than by Hispanics.

The department also said the bank had "vague" procedures for processing applications, did not review loan decisions for bias problems until mid- 1994, and failed to train its loan officers on the equal credit laws.

"There has been a lot of talk about the Justice Department focusing on other creditors besides banks," said D. Jean Veta, a partner at the Washington law firm of Covington & Burling. "This shows that banks remain a high priority for the department."

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