Growth in mortgage lending to minorities and low-income borrowers slowed considerably in 1997, according to government data due out today.

Despite an explosion of programs to help these groups buy houses, Home Mortgage Disclosure Act data show that the number of loans extended to blacks and Hispanics rose by just 4% last year, and loans to Native Americans actually declined, by 1%.

Over the past several years, by contrast, loans to minorities generally surged at double-digit rates.

Some consumer groups are voicing alarm about the numbers, saying that banks' commitment to minority and low-income lending may be flagging. But bankers say the rapid growth earlier in the decade, spurred by heavy public criticism, was simply unsustainable.

"The pent-up demand has been satisfied," said Catherine P. Bessant, president of community reinvestment at NationsBank Corp. "Now we are seeing a more normal demand for loans."

"This is the inevitable payoff for doing the right thing with all of the home ownership programs of the last five years," added David E.A. Carson, chairman and chief executive officer of People's Bank, Bridgeport, Conn. "You would expect to get a surge and then a more normal market growth."

According a copy of the 1997 HMDA report obtained by American Banker, home loans to all low-income borrowers-defined as those earning less than 80% of the local median income-rose 6% last year. The growth was down from 17.7% in 1996.

The 4% rise in loans to Hispanics compares with a 13.4% jump in 1996, while the 4% growth for blacks followed a similarly weak 3.1% gain in 1996. The decline in lending to Native Americans came after an 11.4% jump in 1996.

Despite the slowdowns, loans extended to these groups still rose at a faster rate than loans to whites, which were up by 2%. Whites, however, received nearly three million mortgages last year-about six times more than all other ethnic and racial groups combined.

The trends in loans to minorities are "a source of grave concern," said Robert Gnaizda, general counsel of the Greenlining Institute, a San Francisco-based coalition of community groups.

"Home ownership for African-Americans and Latinos is still only half that for whites," he said. "In the long run, that spells problems for both minority communities and financial institutions, because a disproportionate number of new households are families of color."

Dan Immergluck, vice president of the Chicago-based Woodstock Institute, said the growth rates for loans to minorities may have fallen because banks no longer take the Community Reinvestment Act seriously.

"Some of this is due to a broad political climate where CRA is under attack instead of being promoted as a great tool," he said. "Between the congressional climate and the regulatory climate, you have had pretty free sailing for banks."

Overall, 7,925 institutions reported 16.4 million mortgage applications, an 11% increase attributed primarily to a rise in refinancings.

Judith E. Knight, director for housing and community development at the American Bankers Association, said the double-digit increase in applications proves that banks continue to push into underserved markets to find qualified borrowers. The further banks push, she said, the harder it is to find qualified applicants.

"The more outreach you do, the wider pool you bring in," she said. "This means you get more people who are not yet ready to buy."

Asians were the only ethnic or racial group to experience a significant increase in the growth rate for home loans. They received 12% more loans last year, compared with an 8.4% increase in 1996.

Minorities also continue to be rejected for home loans nearly twice as often as whites. The differences were most apparent for blacks and Native Americans, who were rejected 53% and 52% of the time, respectively. These are the highest rejection rates ever for blacks and Native Americans.

Whites, by contrast, were rejected 26% of the time. Thirty-eight percent of Hispanic applications were rejected, while Asians experienced a 13% rejected rate. Rejection rates were up slightly last year compared with 1996 for all ethnic and racial groups.

The data also show that Hispanics and blacks are more likely than other groups to seek government-insured mortgages. Thirty-four percent of Hispanics and 26% of blacks applying for mortgages opted for FHA-backed loans, compared with 15% of whites, 12% of Asians, and 11% of Native Americans.

The government also found that subprime and manufactured housing lenders were about four times more likely than conventional lenders to turn down a borrower. They rejected 56% of applicants, compared with 12% for conventional lenders.

The data were compiled by the Federal Financial Institutions Examination Council, the umbrella group for banking and thrift regulators. Banks and most mortgage companies must report loan originations, loan purchases, and rejected applications.

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