The peaceful community envisioned by Martin Luther King Jr. is still just a dream for millions of black Americans, and the chilling findings of a new national study of home-loan applications help to explain why. Blacks applying for home loans are rejected more than twice as often as whites, according to an Atlanta Journal-Constitution analysis of the last five years of loan data from America's 3,100 savings and loan associations and mutual savings banks.
Race is a better predictor of a loan application's success than sex or marital status.
First, because they bear out similar, earlier findings in Atlanta and Boston, demonstrating that although regional differences exist, the odds are against home ownership by blacks nationwide. Second, because credit discrimination against people who can't borrow money to buy or fix up houses contributes to neighborhood decline, causing property values to stagnate or plummet in a vicious cycle. The Reagan administration reduced the number of examiner hours devoted to consumer regulations, including fair-lending laws, by 74 percent during its first term. The Federal Home Loan Bank Board, which regulates savings institutions, collected data it never bothered to analyze. And, though regulators reported declines in lender compliance with technical aspects of the Equal Credit Opportunity Act, they have not referred a single case of credit discrimination to the Justice Department for prosecution since 1978.