The Department of Housing and Urban Development plans a more active role in combating discrimination by mortgage lenders and could adopt rules that echo the ones imposed on commercial banks.

Laurence Pearl, director of HUD's Office of Program Standards and Evaluation, told participants at a Consumer Bankers Association workshop that HUD is working with the Office of the Comptroller of the Currency on rules defining what constitutes lending discrimination. He didn't give a timetable for those rules or elaborate on their content.

Pearl did say during the June 23 workshop, however, that HUD plans to establish a unit on lending discrimination in the Office of Fair Housing and Equal Opportunity. HUD also has begun investigating some of its 1,000 approved mortgage handlers for compliance with fair housing policies, he said.

In addition, HUD's regulations regarding Ginnie Mae issuers "need to be updated quite badly," Pearl said, and he noted that the department's new Office of Federal Housing Enterprise Oversight will be developing standards for Fannie Mae and Freddie Mac underwriting.

Pearl's comments signal a potential convergence of lending discrimination rules for mortgage and commercial bankers. At present, however, the gap is substantial and - judging from bank regulators' activities - could even be widening.

Stephen Cross, the OCC's deputy comptroller for compliance management, said his agency is pressing banks to go beyond examining their rejected mortgage applications. The real key to detecting discrimination is to compare approved applications with the rejects and determine whether race made the difference, he said.

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