WASHINGTON -- A Clinton administration housing official said the government is developing regulations aimed at barring insurance redlining.

"It has been 25 years since the passage of the Fair Housing Act, and HUD has yet to promulgate regulations that define the lending and insurance policies and practices that violate the act," said Roberta Achtenberg, assistant secretary of the Department of Housing and Urban Development.

Ms. Achtenberg told the panel that HUD has formed a new unit charged with housing-related insurance matters.

"One of the first tasks of that unit is to develop regulations implementing the Fair Housing Act's prohibition against discriminatory insurance practices," she said.

Banks have argued that one barrier to increased mortgage lending in low-income communities is the unavailability of insurance.

"I have had bankers tell me that there have been loans they wanted to make but couldn't because the borrower couldn't get insurance," said Philip Corwin, a lobbyist for the American Bankers Association.

At least one key Senator agreed.

"Since lenders require their borrowers to secure property insurance, eliminating homeowners insurance discrimination is a logical progression of the committee's efforts to ensure an adequate flow of capital into distressed communities and fair access to financial services," said the panel's chairman, Sen. Donald W. Riegle, D-Mich.

However, the banking industry is not ready to press for new regulations governing insurance companies, Mr. Corwin said.

"We have problems with existing regulations on banks," he said. "So we can't advocate the same kinds of regulations for others."

Shared Responsibility

On the other hand, Mr. Corwin said, the new focus on insurance redlining demonstrates that banks "are not the only ones with responsibility here" for lending in low-income communities.

The banking committee also heard from Rep. Joseph P. Kennedy 2d, D-Mass., and Rep. Cardiss Collins, D-Ill., the sponsors of two competing bills. Rep. Kennedy's bill is considered by far the stronger of the two, and it has attracted strong opposition from the insurance industry.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.