Blacks applying for home loans at some of Baltimore's largest banks were up to five times as likely as whites to be rejected, a new study shows.
The report, based on 1990 data provided to federal regulators under the Home Mortgage Disclosure Act (HMDA), also shows that applicants living in minority neighborhoods of Baltimore faced a home loan rejection rate as much as four times higher than that for those living in white neighborhoods, as defined by U.S. Census Bureau data.
The HMDA data were first released by the Federal Reserve last fall in a report on regional mortgage rejection rates around the country. The study released yesterday was conducted for the Baltimore Unemployed Council, a non-profit coalition of churches, unions and community organizations, by a consultant with the national Association of Community Organizations for Reform Now.
The study, which looked at mortgage, home equity and home improvement loans, provided the first detailed look at the performances of six of the largest banks in the Baltimore area.
The study shows that black home loan applicants were likely to fare worst at First National Bank of Maryland, which rejected more than 18.2 percent of black applicants, a rejection rate 5.2 times higher than that for white applicants.
Mercantile-Safe Deposit & Trust Co. and Provident Bank of Maryland rejected blacks 2.8 times as often as whites, according to the study. Loyola Federal Savings Bank and the Bank of Baltimore had rejection rates for blacks that were 2.4 and 2.3 times higher, respectively, than those for whites. MarylandNational Bank rejected blacks 1.9 times as often as it rejected white applicants, the study shows.
The Baltimore Unemployed Council said it also examined two other banks -- Signet Bank/Maryland and Eastern Savings Bank -- but did not find any of the disparities apparent at the other banks.
Anne B. Shlay, a researcher at the Johns Hopkins Institute for Policy Studies, said the numbers in the report appeared to be valid but that the conclusions drawn by the Baltimore Unemployed Council might not be.
"At this point, it's unclear what happens to produce the rejection rates that they've found," said Ms.Shlay, an associate professor of sociology at the institute and the originator of some of the methodologies typically used to analyze HMDA data. Aggressive marketing by banks, uneven appraisal processes or other factors might have caused the disparities, she said.
Still, Ms. Shlay said, "I think one could conclude that there are some very serious problems going on in the industry."
The council punctuated yesterday's report by staging a rally in front of Mercantile's headquarters just before noon. Chanting slogans and carrying banners, about 40 protesters demanded meetings with bank executives.
The group's leaders warned of the pitfalls of denying financial opportunities to distressed neighborhoods. "Some people don't realize that any city in this nation is a potential Los Angeles," said the Rev. John Carter, pastor at the Eastern United Methodist Church and a member of the Baltimore Unemployed Council.
Members of the council said officials at First National and Provident had agreed to talk with the group, but that the other banks hadn't responded.
Mercantile released a statement yesterday saying it had met with the council several months ago and would be willing to do so again. The bank said it could not respond directly to the report because the council had not talked directly to the bank about its contents.
The Bank of Baltimore said it could not respond to the study until it had had a chance to examine it carefully.
Officers at some banks, including First National, Provident and Loyola, said they recently received positive evaluations by federal regulators looking into compliance with the Community Reinvestment Act , a federal law that requires banks to make credit available throughout the markets they serve.
Some banks, including Maryland National, questioned the study itself, noting that it failed to specify on what basis the loans were rejected. The credit history and the debt-to-income ratio of a mortgage applicant is
as important as income, one of the factors identified in the report, they said.
"It's disturbing that an organization like the BUC, which most people aren't real familiar with at this point, is out there making these misinterpretations," said Vickie Tassan, senior vice president at MNC Financial Inc., the parent of Maryland National Bank.
Ms. Tassan said Maryland National has held monthly meetings with other community groups and has made more than $23 million in home loans available to low- and moderate-income first-time homebuyers since 1987.