WASHINGTON - Less than four months after a community group labeled it one of the five worst lenders in the country, Chase Manhattan Corp. is reporting a dramatic increase in mortgage lending to minorities.
Chase announced this week that it boosted home lending to minorities 270% in 1994, originating 6,578 mortgages to blacks, Hispanics, and Native Americans. That's up from 1,773 mortgages in 1993.
"The results we have shown really depict Chase's commitment to the minority market," Chase senior vice president James Ferriter said. "We think we should be one of the choice lenders from consumers across the board."
National Community Reinvestment Coalition president John Taylor, whose group sponsored the study "America's Worst Lenders," declined to comment.
Chase's minority lending data support statements the bank made when the NCRC study first surfaced in late December. At that time, the bank said its 1994 data would show significant improvements.
But, Bronx-based activist Matthew Lee, who has filed several Community Reinvestment Act protests against Chase, said the statistics are misleading. The increases reflect Chase's purchase of two mortgage companies, rather than bank-generated growth in minority areas, he said.
"I think it is overblown," said Mr. Lee, executive director of Inner City Press/Community on the Move. "The way they report it is disingenuous. They've just bought a company."
While he doesn't oppose banks buying mortgage companies, Mr. Lee said, the purchase doesn't mean minority communities are receiving more loans.
Mr. Ferriter said Chase is proud of its achievements, noting that it showed improvements in serving minority communities across the board. Minorities accounted for 12.7% of all mortgage applicants, more than double 1992's numbers.
Originations to minorities also more than doubled during the past two years, accounting for 11.1% of all of Chase's mortgages in 1994.
Mr. Ferriter said Chase made a conscious decision two years ago to expand from the jumbo mortgage market into residential lending, acquiring mortgage companies Troy & Nichols in 1993 and American Residential in 1994.
The bank also began extensive training and outreach programs to boost business further, he said.
Chase unveiled several new mortgage assistance programs in 1994, Mr. Ferriter said. The Risk Share Affordable Housing Program employs liberal loan-to-value ratios and requires that only 2% of the downpayment come from the borrower's personal assets, he said. Also, the bank unveiled a product requiring only a 3% downpayment and it piloted a program in Maryland last year offering unsecured loans to mortgage borrowers for closing costs.
Chase has not seen any deterioration of its credit quality since it began expanding these programs, Mr. Ferriter said. But, he said the bank is closely monitoring the products, and will reign them in if problems arise.
The growth in lending to minorities is not complete. The bank predicts 14% to 15% jumps in 1995, he said.