NationsBank Corp. and the National Urban League on Tuesday unveiled a comprehensive plan to let people appeal their rejected loan applications.

The bank company said it will spend $1.4 million on a three-year pilot program that will create loan review panels in eight southern states and the District of Columbia.

NationsBank will reconsider applications that a panel deems to have been unfairly rejected. The review group also will work with rejected applicants on ways to improve their credit or better marshal their loan-application data.

The program is the latest attempt by the nation's fifth-largest bank company to demonstrate a voluntary commitment to community lending. NationsBank also hopes to persuade legislators and regulators to relax record-keeping requirements related to the Community Reinvestment Act and the Home Mortgage Disclosure Act.

Lenders Prodded by Regulators

Bank and thrift regulators have been urging lenders to take a second look at rejected consumer, mortgage, and small-business loan applications through internal review panels. Some banks have said such reviews lead to approval of 10% to 50% of loans that were initially rejected.

NationsBank, which said the panels will initially focus on mortgages and home-improvement loans, appears to be the first large bank company to formally set up review panels coordinated by outsiders.

Each group will include the president of a local Urban League affiliate, three community representatives, and three credit officers from the bank. The plan is expected to be operational in 18 cities by March 1.

John E. Jacob, chief executive of the National Urban League, said he will encourage other banks to join the review program.

"The intent is to raise the consciousness of the institutions so they have a hypersensitivity to understand the people they serve," he said.

Hugh McColl, the chairman and chief executive of NationsBank, said his company hopes to uncover conscious and unconscious prejudice on the part of lenders and credit officers through the review panels.

"We will review turndowns to see that we don't have discriminatory practices," he said. "We probably have some people who are overtly prejudiced, and when we found out we will get rid of them."

Another Agenda

The feisty chairman, whose company promised at the end of 1991 to make $10 billion of community loans over 10 years as part of its deal to buy C&S/ Sovran Corp., also hinted at another agenda.

"We would love to have the government relax CRA paperwork," said Mr. McColl, an outspoken advocate for rolling back record-keeping requirements. "We want to be judged on the results rather than on keeping the books."

The Urban League's Mr. Jacobs said his group, which has 113 national affiliates, is taking a calculated risk in working so closely with a big commercial bank.

"What prompted us to put our national credibility on the line for this is that our cause is right," he said. "The bank has money, we have goodwill and credibility, and we both have customers. Our customers ought to be their customers."

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