Minority home buyers in Erie County find it easier to get mortgages
today than four years ago, but many lenders have a long way to go in granting equal access to credit, a Buffalo News analysis of nearly 44,000 loans made here in 1993 shows. Local lenders still turn down more mortgage applications from black and Hispanic applicants than from white applicants -- 20 percent of blacks were turned down in 1993 versus 6 percent of whites, for instance.
    But the gap has narrowed since 1990, when 30 percent of black mortgage applicants were rejected, compared with 8 percent of whites.
    The local minority rejection rate in 1993 was lower than the national average of 34 percent, which has not changed since 1990.
    "There has been a lot of success, but a lot of the success is by a relatively small group of lenders compared to the total," said Michael Taliefero, whose Channel Link Partners in Washington, D.C., consults with lenders in Buffalo and across the nation. "There still are a lot who haven't gotten religion."
    Erie County loan records for 1993 show:
    Although black homeowners and renters make up 11 percent of the county's population, only 5 percent of all mortgages granted in 1993 went to blacks.
    Six percent of local homeowners are black, but they got only 1.6 percent of refinanced mortgages in 1993, a year when lenders made record numbers of refinancing loans here.
    Most loans to blacks went to integrated neighborhoods on the eastern and northeastern edges of the city. Lending also is reaching adjacent suburban neighborhoods. The only concentration of central city lending to blacks is in the neighborhoods adjacent to downtown where there are pockets of new-home construction.
    Only 33 of the 798 loans to blacks for home purchases and refinancings went to inner-city census tracts.
    Realtors say part of the problem with the inner city is that homes just aren't selling.
    "In the city, it is taking six months to a year to move properties," said Tom Evege, who runs Tom Evege Real Estate Co. at 1600 Jefferson Ave. and is one of three black real-estate appraisers in the city.
    New programs help
    A handful of local banks and regional mortgage companies that made special efforts since 1990 to boost their minority lending have had success. The number of loans to minority home buyers and those fixing up their homes has
increased by 39 percent in the county since then.
    Inner-city real-estate agents, including Bill J. Gillespie, who has run his own agency on Bailey Avenue for more than 40 years, have noticed a difference.
    "This year, I've had a good experience with the programs that the banks have instituted for the purpose of relaxing the requirements to qualify (for a mortgage)," he said. "They have worked excellently."
    Other lenders don't seem to be making much of an effort to court minority borrowers in Buffalo. Some mortgage companies, for instance, don't open offices in local communities. Instead, they work through local mortgage brokers who tend to do business in white, affluent suburbs.
    The 1993 lending records show that 29 independent mortgage companies operating in Erie County last year took few or even no applications for mortgages from black home buyers.
    One of those was SBU Realty Credit Corp., a Syracuse-based subsidiary of the Savings Bank of Utica, which took 215 home purchase and refinancing applications in Erie County in 1993. Only two were from blacks and two from Hispanics.
    The company works through local mortgage brokers, which may be why it took few minority applications, said spokesman Walter Rogers.
    "It's the brokers; it doesn't make any difference to us," he said. "It's where they do it and where they get the loans from."
    Some lenders do little
    Even among the county's largest lenders, some big banks and mortgage companies took relatively few applications from blacks and granted blacks even fewer purchase and refinancing mortgages.
    The News ranked the 14 largest lenders that each had more than 1.5 percent of the county's mortgage market. The rankings evaluate their performance in
lending to blacks based on the percentage of applications for mortgages they took from blacks and the percentage of mortgages they granted to blacks. Those percentages were compared with the average percentages of all lenders in the county and to the population of black homeowners and renters.
    Fleet and M&T banks, along with four mortgage companies -- GMAC Mortgage,
Sibley Mortgage Corp., Power Funding Group and Spectrum Home Mortgage -- had above-average performances.
    Other banks and mortgage companies did poorly: Applications from blacks taken by Chase Manhattan, for instance, amounted to only 2 percent of all applications it took in 1993.
    Chase Home Mortgage Corp. was among a group of national lenders that were identified independently as being among the nation's worst lenders to minorities by the National Community Reinvestment Coalition, a lobbying group in Washington, D.C.
    Lockport Savings showed up poorly in the rankings, probably because it has only three branches, all in predominantly white suburbs of Erie County. It did well in a ranking of the rejection rates because it did not turn down any black mortgage applicants.
    "This indicates a need by these institutions to re-examine their marketing efforts and ask themselves some serious questions about why
African-Americans may not find it worth their while to apply for a mortgage from their institutions," said Scott Gehl, executive director of Housing Opportunities Made Equal in Buffalo.
    Banks felt the pressure
    Experts say it was the 1991 public disclosure of comparative rejection rates for minority and white mortgage applicants that convinced lenders they had to change their practices.
    Fair-housing advocates had long insisted that lenders ignored minority neighborhoods and shunned minority applicants.
    However, it is very hard to prove an individual case of mortgage
discrimination has occurred, because lenders can point to many objective reasons for turning down a loan. The Department of Housing and Urban Development, which investigates complaints, has received only four complaints over the last year from Western New Yorkers. None of the complaints resulted in actions against lenders.
    In 1991, fair-housing advocates finally got the hard numbers to prove their case. In that year, federal bank regulators released data on the race, sex and income characteristics of every applicant for a mortgage and home-improvement loan in 1990.
    The statistics were damning: Blacks were more than twice as likely as whites of similar income to be rejected for mortgages. A year later, the Boston Federal Reserve Bank looked at credit information in loan files at local banks and found that minority applicants with credit histories similar to whites were rejected at higher rates.
    A study released last week on default rates on 220,000 federally subsidized mortgages found that the default rate of black borrowers was higher than for whites. Fair- housing advocates have criticized the study, because the mortgage program used in the study is targeted at low-income borrowers who are more likely to have problems paying back a loan.
    But it was the data on loan rejection rates, released under the federal Home Mortgage Disclosure Act, that had a great effect on lenders.
    When local numbers for 1990 revealed a higher rejection rate for minority applicants, local lenders at first vehemently denied that they discriminated in their lending.
    That attitude changed during the ensuing national debate over whether the home mortgage lending system unintentionally discriminates against applicants who do not meet the profiles of white, middle-class borrowers.
    "Without question, there can't be a responsible institution that doesn't pay attention to that kind of information," said Robert Bartkowski, community reinvestment officer for Key Bank in Buffalo.
    Even if lenders didn't focus on their moral obligations, they had to react to negative news stories, fair-housing advocates say.
    "I think the industry has begun to understand what a horrible public relations problem the HMDA data has become for them," said Jerry Jones, a spokesman for the Association of Community Organizations for Reform Now in Washington, D.C.
    More minority loans
    A lot of local lenders, especially the largest, paid attention. Banks like M&T, Key, Marine Midland, Fleet and Rochester Community Savings Bank as well as mortgage lending companies like Sibley and PNC instituted programs that include low down payments, alternative qualifying standards and second looks at rejected minority applicants.
    Local lenders say last year's lower rejection rates for minorities don't tell the whole story: What's more important is that more minorities are getting loans.
    Black home buyers in Erie County got 491 mortgages in 1993, almost double the number granted to blacks the previous year.
    But because minority home buyers continue to be rejected more frequently than whites, critics say, discrimination remains a serious problem.
    "The disparities nationally are continuing," said Alan Fishbein at the Center for Community Change, a Washington, D.C., advocacy group. "Although the numbers of loans that have been made are up for African-Americans, the disparities between African-Americans and whites continue."
    Aggregate data for Erie County suggests that things are improving, but the overall data obscures poor records among a large number of lenders, critics say.
    In Erie County, one lender -- M&T Bank -- accounts for a large number of mortgage and home- improvement loans to blacks and Hispanics.
    M&T made 477 of the 1,391 mortgage, home-improvement and refinancing loans made to blacks in 1993. The next-best record was compiled by Key Bank and its mortgage subsidiary, with 173 loans.
    M&T made almost 30 percent of all minority mortgages throughout Western New York in 1993 and almost two-thirds of all minority home-improvement loans, said James Beardi, a senior vice president.
    The bank's biggest concentration of black lending occurred in the neighborhood east of Main Street bounded by Jefferson Avenue, East Delavan Avenue, East Ferry Street and Humboldt Parkway.
    M&T's lending to blacks for all home lending is dispersed, with pockets in the city's northeastern sector, new downtown housing tracts and inner city.
    M&T may distort the average of all lenders in the county because it has reduced its rejection level of black applicants to almost the same as for whites: In 1993, it rejected just 4 percent of blacks buying homes or refinancing mortgages, compared with 3 percent of whites.
    That record was a big improvement over 1991, when it took only 33 mortgage applications from blacks and rejected more than half of the applicants.
    Crime is big factor. 
Some observers believe that the lenders' efforts will not be enough to erase the differences between the numbers of loans made to blacks and whites because there are larger societal problems that reduce minority access to housing loans.
    "The city has been very difficult because of the crime," Evege said. "The banks are fair, and I think it is the economy more than any type of
discrimination. The market prices have dropped, and I think it is due to the increase in taxes and the economy and the crime."
    Real-estate professionals say lending to Buffalo's inner-city neighborhoods will not improve dramatically until underlying economic and social
conditions are improved.
    "It's not a question of racial prejudice at all," said Frank Parlato of Parlato Real Estate on Grant Street. "It's just that the areas hardest hit economically are predominantly minority neighborhoods, like the East Side and Lower West Side."