Lenders Agree to Widen Opportunities

A trade group representing more than 3,000 mortgage lenders across the nation signed an agreement with the federal government Wednesday aimed at making more loans to buyers in poor neighborhoods and increasing the number of minorities who work in the banking business.

The pact, signed by officials of the Mortgage Bankers Assn. of America and the Department of Housing and Urban Development, will also require lenders to designate a loan officer or department to handle consumer complaints and monitor their progress in making more loans to disadvantaged borrowers.

HUD Secretary Henry G. Cisneros, who signed the agreement with MBA President Stephen B. Ashley, called it a milestone in the Clinton Administration’s efforts to broaden homeownership opportunities.

Cisneros also praised the Washington-based banking trade group for accepting a voluntary program instead of waiting for a government mandate.

“There are limits to what can be accomplished through statutory requirements and their enforcement, which is reactive, time-consuming, costly and too often narrowly confined to specific cases,” Cisneros said.

About 500 of the 3,000 mortgage bankers covered by the pact do business in California, the banking trade group said.

The agreement does not create any new loan programs for poor or minority borrowers, but requires the lenders to do a better job of telling borrowers about such programs.

Although the voluntary agreement does not carry the force of law, most mortgage bankers have said they will abide by it--in part because they fear that otherwise the government would impose mandatory guidelines that are even more strict and cumbersome.

The federal Community Reinvestment Act already requires most commercial banks and savings and loans to adhere to many of the elements in the agreement signed Wednesday.

However, mortgage bankers--who specialize in making home loans and do not offer traditional banking services such as savings and checking accounts--are not covered by the federal legislation.

Some mortgage bankers hope the new agreement will fend off expansion of the CRA to their own industry. U.S. Rep. Joseph P. Kennedy II (D-Mass.) has set a Sept. 29 hearing to discuss such an expansion.