How to fight mortgage discrimination … and win!!! African Americans join forces to end racist lending practices. Black Enterprise reviews fight-back techniques that can work for you - includes related articles on New York, New York's East Harlem and South Bronx communities and ways to investigate lensing institutions - Cover Story

Harris Trust and other lenders worry that an influx of minority applicants due to community outreach programs could show up negatively in HMDA reports. "Not everyone who walks into the bank qualifies for a loan," Williams says. "But we do want to work with potential home buyers through credit counseling."

Other lenders, including Freddie Mac and Fannie Mae, are making loan guidelines more flexible, allowing gifts from relatives and friends to cover down payments. Some lenders are marketing loans to minorities and to low- and moderate-income buyers. Many of these programs allow for smaller down payments, offer lenient income-to-debt guidelines and knock off a few closing points.

But despite these and other such efforts, pressure on the nation's financial institutions to improve minority lending is not likely to ease. Even if lenders follow the three "c's" of credit - capacity (to repay), collateral and character - when evaluating applicants, the record shows African-Americans are often judged by a fourth "c" as well - the color of their skin.

A COMMUNITY SETS

THE STANDARD

For decades, New York's East Harlem and South Bronx communities watched major banks abandon them for upscale parts of the city. Without other banks in their area, residents turned to Bank of New York (BoNY), but found difficulty being accepted for loans. Finally, after those with moderate and higher incomes complained that their loan applications were rejected unfairly, the community swung into action.

Two New York City-based nonprofit economic and social development organizations took on the investigation: the Community Coalition for Fair Banking (a project of East Harlem Interfaith) and Inner City Press/Community on the Move. They charged that BoNY placed branches in wealthy Manhattan communities and then bypassed Harlem and the South Bronx. Last September, the community group created a legal precedent to fight mortgage lending discrimination and define a bank's service area, by using provisions of the Community Reinvestment Act (CRA) to stop BoNY from purchasing 62 branches of Barclays Bank. They convinced the New York State Banking Department that the BoNY did not meet the credit needs of low-income residents (per CRA).

"We argued that the Bank of New York does have a presence in our communities because they advertise with us through radio and television," says Claudette Spence, director of East Harlem Interfaith. And with that presence comes a responsibility to address the community's needs. Many people in East Harlem had accounts at BoNY branches in Manhattan and they used the bank's services through its 800-number and electronic teller machines.

East Harlem is a 250-square-block area often referred to as "Spanish Harlem." Across the Hudson River to the east is the South Bronx, a low-income black and Latino community.

Interfaith officials say banks are reluctant to invest in the inner city because it's not considered profitable. They prefer to spread their risk by doing million-dollar projects in conjunction with the city and community organizations, rather than making individual loans.