WASHINGTON - As a landmark mortgage discrimination suit against NationsBank works its way through the courts, one thing is clear: Despite years of talk and action on this thorny issue, lenders and community activists are as far apart as ever.

Where lenders say they see high risk, consumer advocates see prejudice.

In the NationsBank suit, 11 blacks who failed to get home loans charge that NationsBank turned them down because of their race.

"These were makeable loans," said Richard J. Ritter of the Washington Lawyers' Committee for Civil Rights and Urban Affairs, which represents the 11.

NationsBank said it did not discriminate when it turned down these borrowers, who include government workers, a retired nurse, and a tax accountant.

In a recent interview, Catherine Bessant, a NationsBank senior vice president, dismissed the allegations as "nothing short of outrageous."

Ms. Bessant said her bank has worked hard to reach out to black borrowers and has designed a system that gives employees incentives to close such loans.

It doesn't make business sense for the bank to turn down loans it can approve, Ms. Bessant argued. "There's actually a hard dollar cost, something like over $500, for every decline we make," she said.

Indeed, even many community activist acknowledge that NationsBank has led the effort among banks to boost lending to minority borrowers.

So what's going on here?

Lenders say that what looks like racial bias to the outside observer is actually uncertainty about how to make loans to borrowers they have long ignored - in many cases, minority borrowers, whose credit histories, incomes, and level of debt put them at the margin of being able to afford a home.

Lenders can make statistical predictions about how loans to their traditional borrowers - that is, white suburban borrowers - will perform. But they haven't been making loans to this new class of borrowers long enough to know the profile of those most likely to default, Ms. Bessant said.

Other lenders said they don't have a lot of financial room to make mistakes.

"When you think about it, even a terrible portfolio may have, out of every 100 loans, maybe eight that go into foreclosure. The other 92 pay off the loan," said Terrance G. Hodel, president of North American Mortgage Co., Santa Rosa, Calif.

By contrast, an acceptable portfolio may have only four loans out of 100 go into foreclosure, Mr. Hodel said.

Fine-tuning the underwriting decisions so that you end up with a pool of borrowers of whom only four, not eight, default is "very hard to do when you've got maybe 30 different factors: down payments, credit, and all these things," Mr. Hodel said.

The lawyers for the plaintiffs in the NationsBank case say they don't buy this explanation. Underwriting may be an art, they say, but the problem is that credit blemishes and other hurdles on an application by a black borrower just loom larger than they do on white applications.

In 1990-93, NationsBank was 12 times as likely to reject a black applicant, citing credit problems, as a white with similar income, said John P. Relman of the Washington Lawyers' Committee. And the bank approves 97% of applications from white applicants, he said.

"If they're really treating people equally, and we know that they're very accepting of whites, it seems to us highly unlikely that blacks truly deserve to be turned down 12 times as often as whites," Mr. Relman said.

Some senior executives say they do worry about the disparity in delinquency rates of mortgages made to white and black applicants, and whether that means loans to black applicants are intrinsically riskier than those to whites. It's hard not to wonder if that affects the way underwriters perceive credit problems of black applicants at the very outset of the process.

At Countrywide Funding Corp., the nation's largest mortgage originator, Angelo Mozilo, president and chief executive, confirmed that loans to blacks go delinquent at "significantly higher" rates than loans to whites. He declined to give specific numbers, saying the information would encourage biased lenders to avoid making mortgage loans to black applicants.

Mr. Mozilo said Countrywide was "meticulous" in giving black applicants the same treatment as white applicants.

Providing equal access is a tough job, said Stephen Morrison, senior vice president and general counsel at Norwest Mortgage Inc., Des Moines.

"Every case is different. Everybody comes in with different documents, different stories, different reasons, different needs," Mr. Morrison said. Providing equal access to all applicants is far more difficult than arriving at equal outcomes once the access has been given, he added.

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