WASHINGTON -- Despite heightened attention to lending discrimination, the disparity in mortgage-denial rates between black and white applicants increased in many cities last year, according to a national activist group.

In a survey of 120 lenders in 23 cities, the Association of Community Organizations for Reform Now found that black applicants seeking conventional home mortgages were rejected 2.86 times as often as whites, up from 2.72 in 1991. The group also found that applications from blacks fell 20% between 1990 and 1992.

"Minorities' share of the mortgage pie appears to be shrinking," said Maud Hurd, national president of Acorn. "Too many minorities are still treading water in a sea of lending discrimination."

Despite the bad news, the report did show some progress. About 55% of the lenders with more than 25 minority applications showed some evidence of declining differential treatment.

First Broad Analysis

The portion of conventional loans originated to blacks and hispanics increased last year, to 9.2% from 8.9%. But that was still lower than the 11.4% share in 1990.

The analysis also found four lenders where white applicants were actually denied more often than blacks and hispanics: Manhattan Saving Bank, New York; Bank One Dallas; First Interstate, Phoenix; and Bank of Boston Mortgage Corp.

The report is the first broad analysis of last year's Home Mortgage Disclosure Act data, including 85,652 applications for conventional single-family mortgages.

Fed Report Due Soon

While banks have released individual data on minority lending for 1992, the Federal Reserve has not yet released aggregate data on national trends. That report is due out in early November.

Last year, according to the Federal Reserve, minorities were 2.17 times as likely to be denied home mortgages as whites. In 1990 - the first year banks were required to make application information public - that rate was 2.35 times as often.

"It is going to take years to change the overall patterns, because of the complexity of what's going on behind the numbers," said Virginia Stafford, an American Bankers Association spokeswoman.

"In relative terms, a year is hardly any time at all if you want to make meaningful change. While it is very difficult to find a good measure of how well our efforts are working, we do believe they are making a difference," she added.

Some |Shocking' Declines

But community activists say the industry is not doing enough.

"While there are some positive changes at many lenders, it does not appear that the banking industry as a whole is willing or capable of narrowing the minority-loan gap on its own," the Acorn report said.

The report singled out two lenders for "the most shocking deteriorations in performance": Citibank, where the share of loans going to blacks and hispanics in New York fell to 3% in 1992 from 11% in 1990, and Sears Mortgage Co., where in Chicago the share fell to 3% from 22.9%.

And five lenders rejected blacks and hispanics more than 7 times as frequently as whites: Harris Trust and Savings Bank, Chicago; St. Paul Federal, Chicago; Loyola Federal Savings and Loan, Baltimore; Sears Mortgage Corp.; and Northern Trust Co.

Acorn highlighted Philadelphia as an example of a city with a strong record of minority lending. Overall, 43% of loans made at the lenders surveyed there went to blacks and Hispanics last year, up from 35.6% in 1990. In New York, 13.6% of loans originated by those surveyed went to blacks and Hispanics.

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