The Federal Reserve Board's Home Mortgage Disclosure Act report last fall showed that African-American and Latino applicants are turned down for mortgage loans two to three times as often as whites.

Bankers defend themselves by arguing that the HMDA data were incomplete and prove nothing because they do not include "information critical to judging the credit-worthiness of loan applicants," according to the American Bankers Association.

But community activists see the study as proof that discrimination and redlining -- the illegal practice of avoiding lending in minority neighborhoods -- are alive and well in American cities.

In Chicago, for example, are minority families who underscore what former Sen. William Proxmire called a "bombshell" in the HMDA data: the fact that affluent black applicants are denied conventional and government-backed loans more often than poor whites.

"That reveals just the cruelest, most direct, explicit kind of discrimination on the basis of race," said Mr. Proxmire, the author of legislation in the 1970s designed to outlaw such practices.

In one case, Peter and Dolores Green applied for a mortgage loan in 1989 from Avenue Bank of Oak Park in Chicago. They wanted to buy the six-flat building that they have called home for 30 years.

Turned Down -- and Embittered

They live on Chicago's predominantly African-American West Side and are financially secure, well-paid, black professionals.

The Greens were turned down, and embittered by the experience. They have since filed a federal lawsuit alleging loan discrimination.

Difficult as it is to prove racial discrimination in lending, the Greens are not alone. In Atlanta, Los Angeles, St. Louis, and other cities, victims of alleged bias are taking their charges public.

In a neighborhood not far from the Greens, a couple with assets exceeding $1 million are planning to sue a major bank because they believe they were turned down on the basis of their race and their neighborhood.

Meanwhile, the Greens wrote a letter of complaint to the Federal Reserve Board. The letter was referred to the Federal Deposit Insurance Corp. which regulates Avenue Bank.

But the history of the four federal agencies that enforce fair lending and community re-investment laws does not bode well for the couple. In 18 years, in only one instance has an agency referred a discrimination case to the Justice Department for prosecution.

The Greens didn't get very far. Despite its own guidelines, the FDIC did not interview the couple. The agency did contact the bank, which provided documents indicating the loan "exceeded the appraised value on the property," according to a letter from the FDIC to the Greens.

That was the first written explanation the couple received for why they were turned down -- and the reason was different from that provided by the bank.

Peter Green says: "The FDIC and those other agencies which have been mandated to oversee these [lending] institutions [are] falling short."

As he sees it, until financial institutions and regulators adequately address the persistent problem of loan discrimination, African Americans and Latinos will continue to be denied access to the American dream. Ms. Henry, who is based at the Center for Investigative Reporting in San Francisco, is an associate producer of "Your Loan is Denied," a documentary airing tonight on the Public Broadcasting Service's "Frontline" series.

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