Other Factors Shape Housing Loan Gap

The article “Home Loan Gap” (Sept. 8), on home mortgage data in Los Angeles County, detailed some of the underlying causes behind the disparities in mortgage approval rates between ethnic groups.

Bankers throughout California agree that the mortgage data from 1990 is disturbing, and that more needs to be done to provide equal access to credit for all Americans, regardless of race.

However, we want to emphasize that the CBA and its members condemn practices which illegally discriminate.

As your article noted, the main reason lenders do not approve loan applications is adverse credit history. Other major factors include debt-to-income ratios and insufficient collateral.

Equally important to the mortgage lending issue is the fact that banks have not historically been a major player in the home-lending market. This has changed in recent years as the number of S&Ls; in the state (the main mortgage lenders to date) has shrunk, and banks have begun to fill the gap.

One point that the story missed however, is the different methodologies used by financial institutions in obtaining potential borrowers.

For example, Great Western has only one branch in South-Central Los Angeles, while Bank of America has 12 branches. Thus, savings & loans such as Great Western have had to rely more heavily on mortgage brokers to give them business, while banks have traditionally relied on walk-in customers.

California banks are looking more closely at not only their mortgage lending records, but also non-traditional market strategies to step up their efforts and remove any unnecessary obstacles that may unfairly affect minority loan applicants.

Banks are in the loan-making business. If a bank has the opportunity to make a good loan, it will do so, regardless of the color of the applicant.

LARRY D. KURMEL

San Francisco

The writer is executive director of the California Bankers Assn.