Who's been making mortgages in Los Angeles' inner city? Thrifts, thrifts, and more drifts.

The California League of Savings Institutions has unveiled a study showing that thrifts account for nearly 90% of mortgage originations in south central Los Angeles, the site of the recent riots.

Banks and mortgage companies split the remaining 10% of the business evenly.

"This proves beyond any reasonable doubt that S&Ls have a vital place in American life," declared Jay Janis, president of the trade group.

|Hungary for Good Loans'

"Our guys are really hungry for good loans, and most of them realize that inner-city lending can be profitable." Banks, for their part, shrugged off the California trade group's study.

"It looks like the S&Ls are doing what S&Ls are supposed to do -they're making residential mortgages," said a spokeswoman for Wells Fargo Bank.

Thrifts, to be sure, do not have perfect records as lenders to low-income people. Nearly twice as many thrifts as banks, on a proportional basis, received low regulatory marks for community reinvestment activities in the 18 months through last December, said Miami consultant Kenneth Thomas.

None of which has dampened the enthusiasm of the California League, which represents many of the nation's largest thrifts.

Prodding the Competition

The group trumpeted the results of the study earlier this month in Hotline, its membership newsletter, and Mr. Janis has been spreading the word in his travels.

He aims directly at the competition when he says that his group understands the financial value of low-income lending.

"I don't think banks have come to that conclusion," Mr. Janis said in an interview.

The study, based on lending data reported by banks, thrifts, and independent mortgage companies under the Home Mortgage Disclosure Act, was compiled by Smith Banking Consultants, Glendale, Calif.

Thrifts wrote $1.7 billion of the $1.9 billion of home loans extended in south central Los Angeles in 1990, according to the study. That 89% market share was for ahead of the 66% share of mortgage lending by thrift statewide.

A Handle on Originations

Among other findings:

* Ten S&Ls each wrote more than $45 million of loans in the area in 1990, while no bank handled more than $40 million.

* One thrift, Great Western Bank, grabbed fully 25% of the area's originations.

* The thrifts' domination of the market occurred even as they suffered a net deposit outflow in south central Los Angeles. This contrasts with findings by housing advocates that deposit-taking generally far exceeds mortgage lending in lower-income areas.

Great Western's leadership position in south central Los Angeles reflects its corporate focus on "the middle to lower-middle component of the housing market," said Ian Campbell, a spokesman.

|Stronger Tradition'

The thrift's average mortgage size in all its markets is $125,000, he said. Its inner-city loans generally perform on a par with other mortgages, and are made through Great Western's main mortgage area, not through a special low-income unit, Mr. Campbell added.

California banks, which have boasted in recent years of their mortgage-making prowess, did not dispute the thrift group's findings.

Thrifts have a "longer and stronger tradition in mortgage lending," said Larry Kurmel, president of the California Bankers Association.

Other bankers said they often make their biggest contributions in lower-income areas through construction lending and other forms of nonmortgage credit.

Even the California League acknowledged in its newsletter that banks' small-business lending in minority neighborhoods "may be commendable."

Structural Advantages

Mr. Kurmel added that thrifts enjoy some clear structural advantages over banks in residential mortgage lending, including easier access to the low-cost funds of the Federal Home Loan Bank system.

Banks have been allowed to join the Home Loan Bank system since 1989, but many do not hold enough mortgages to be eligible, Mr. Kurmel said.

Moreover, he contended, some banks that joined have been penalized by examiners for tapping the funds. Examiners viewed the loans as signs of weakness, akin to borrowings from the Federal Reserve's discount window, he said.

A spokesman for the Home Loan bank system said he was unaware of any such cases. "We have an education process going on with regulators to make sure they understand the system,"he said.L.A. StoryTop mortgage lenders in South-CentralLos Angeles in 1990;dollars in millions.THRIFTSGreat Western Bank $430Home Savings of America 238American Savings Bank 203BANKSBank of America $40First Interstate Bank 14Wells Fargo Bank 8Source: California League of Savings Institutions

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