WASHINGTON - A new study concludes that minorities pay slightly higher rates than whites for government-backed mortgages - a finding that could intensify concerns about bias in loan pricing.

The study, by two Fannie Mae economists, comes as the Justice Department is believed to be investigating the pricing policies of several mortgage lenders.

Blacks and Hispanics on average paid an additional 3 basis points, or a $1.80 a month more, for their loans, economists Gordon W. Crawford and Eric Rosenblatt found.

They cautioned, however, that the disparities may be too small to be significant.

The "practical price differences by race may be limited enough in magnitude or circumstances to ignore for both research and public policy purposes," they wrote.

An activist, however, said the results merit close attention.

National Community Reinvestment Coalition president John Taylor said the study should encourage the Justice Department to continue its investigation into loan pricing.

"I don't think these things are in and of themselves conclusive," he said. "But they are signposts indicating where there is smoke and fire."

The authors, who stressed that their work does not reflect the views of the Federal National Mortgage Association, will release their study today at the American Real Estate and Urban Economics Association meeting here.

This is the first study to examine rate differences so closely.

The economists looked at more than 8,500 loans originated by the now defunct City Federal Savings Bank of New Jersey between 1987 and 1989. They examined the rate people paid after adjustment for points for loans to different racial and ethnic groups.

They said one possible explanation for their results is that blacks in particular have a harder time switching lenders to get a better rate when the market falls during their rate-lock period.

"It certainly doesn't mean there is discrimination," Mr. Rosenblatt said. "You can have price differences without having discrimination."

They found no price difference for conventional loans.

Mike ter Maat, an economist at the American Bankers Association, questioned the study, saying the differences in prices are irrelevant because they are so small.

"The authors themselves acknowledge that they are not certain they found a differential, let alone the causes of it," Mr. ter Maat said. "That is an important point."

Because the differential is so small, activists can't charge it shows that banks discriminate, he said.

Officials at the Mortgage Bankers Association and America's Community Bankers declined to comment, saying they haven't seen the study. But Mr. Taylor said the study confirms what community groups have known for years.

"This clearly is one area where discrimination is taking place," he said. "There is no reason why there should be higher interest rates that disproportionately fall on people of color."

Richard Ritter, a former fair-lending prosecutor at the Justice Department who now consults, said the results don't surprise him.

"We found it fairly clearly established in the Vicksburg case," Mr. Ritter said, referring to the 1994 settlement on pricing discrimination charges with First National Bank of Vicksburg, Miss.

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.