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U.S. to take aggressive stand on housing bias


WASHINGTON -- The federal government will take a more aggressive approach to combating discrimination in home mortgage lending, including probing banks' willingness to accept Veterans Administration and Federal Housing Administration loans and allegations that they market only to whites, a Department of Justice official said Tuesday.

The government will go beyond simply examining figures that show blacks are rejected for mortgage loans at levels more than twice as high as whites of similar incomes, said John R. Dunne, assistant attorney general in charge of the civil rights division.

Instead, the Department of Justice is now telling financial regulatory agencies it wants "a more aggressive enforcement program and the development of sound cases for litigation," Mr. Dunne said in a speech in Washington last week.

The banking industry is under growing pressure to narrow the racial gap in mortgage lending because of a Federal Reserve Board study last fall that presented the mortgage-rejection statistics.

As a result, the Office of the Comptroller of the Currency last week said it was investigating more than 250 banks with high rates of rejection for minority applicants. At some of those institutions, minorities represented fewer than 1 percent of applicants.

Using information gathered by local fair-housing groups, the Justice Department filed a major lawsuit May 18, alleging discrimination against blacks, Hmongs (an ethnic group from Southeast Asia) and families with children in the Wisconsin cities of south Milwaukee, Oshkosh, Appleton and Greenfield.

L The suit was filed against the owners of 2,000 rental units.

Numerous studies have shown "disparate lending patterns for white and black neighborhoods, but the subject is suddenly gaining new attention in the government," Mr. Dunne said.

"These issues have surfaced again as a result of the recent riots in Los Angeles," he said.

Government-backed loans, such as VA and FHA mortgages, "are very much in demand in minority neighborhoods, often to a much greater extent than in white neighborhoods," he said.

"We will certainly look closely at lenders who, without a plausible explanation, fail or refuse to originate these loans, or accept them in only token numbers," he told the conference sponsored by the Federal National Mortgage Association, the nation's largest investor in home mortgages.

"Most lenders will have a ready explanation for each and every loan they reject," Mr. Dunne said.

"However, when their credit decisions are carefully reviewed over time, it is possible to analyze whether those explanations are legitimate or a pretext for discrimination."

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