WASHINGTON - A group formed by Washington-area lenders and community organizers has been reviewing rejected mortgage applications - and helping some of the applicants get loans.

Participating lenders can decide to make the loans themselves.

The Capital Area Mortgage Partnership was formed in April. So far, the group has reviewed 12 applications.

Nine came from minorities, according to the group's executive director, Muslimah Ramadan. Three of the would-be borrowers eventually got loans, she said - one from a participating bank, the other two from mortgage bankers.

The group made the applications more acceptable to lenders by restructuring so that the loan-to-value ratios fell, she said.

Excessive loan-to-value ratios are one of the major reasons for loan rejections industrywide. Special programs for low-income lenders, however, often include features that permit loans as high as 97% of value.

For the other rejected loans received by the group, the primary problem was that borrowers carried too much debt, she said. Excessive debt is also a common cause of loan rejections.

The group's activities are yet another wrinkle on efforts to increase lending to minority and low-income borrowers. Other efforts focus on activities such as counseling on credit and homeownership, funding of down payments, or making loans directly.

Ms. Ramadan said the partnership was formed to give borrowers who have been turned down some alternatives. She said community organizers were driven by recent publicity on discriminatory lending practices in the Washington area.

Based on its experience so far, however, the group is also combating a lack of familiarity with the lending practices of large institutions, according to Leroy Hubbard, chairman of the partnership's board.

For example, borrowers whose applications are turned down may be unfamiliar with bank underwriting practices, such as limits on the total debt a borrower may carry.

From a consumer perspective, it may appear to be unfair, not understanding underwriting and debt ratios, Mr. Hubbard said. "A lot of it has to do with understanding, or misunderstanding, maybe, in some cases."

Andy Morse, vice chairman of the group and a senior vice president at Riggs National Bank, said the partnership helps lenders and community activists exchange ideas.

Chevy Chase Bank, Citibank, Citizens Bancorp, Crestar, First National Bank of Maryland, Riggs Bank, and Signet Bank are among the group's founders.

They review rejected applications every two weeks.

The group is also supported by the Neighborhood Reinvestment Corp. and the Federal National Mortgage Association.

It plans to expand its activities to include counseling and a revolving loan line that would help borrowers consolidate debt and finance down payments, Mr. Hubbard said. It hopes to have reviewed 50 applications by yearend.

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