Press release containing revised proposals for changes in regulation B 383 Regulation B, Equal Credit Opportunity- 534 Regulation C, Home Mortgage Disclosure__ 519 Federal Savings and Loan Council of Illinois, statement concerning home 590 National Center for Urban Ethnic Affairs, reprint of publication titled "Disclosure and Neighborhood Reinvestment-A Citizen's Guide," a handbook on how to use the information from the Home Mortgage Dis- Federal regulations: What you need to know. Action strategies: Making disclosure work in our neighborhoods: Reprint of national survey documenting redlining----- Philadelphia, fact sheet on mortgage criteria for inner city--- Public Interest Research Group, memorandum from Jon Brown to NCUEA Reprint of Public Law 94-239, 94th Congress__. Rosser, Lawrence B., executive director, Woodstock project and Bradford, Calvin, associate director, Center for Urban Studies, University of Illi- nois, reprint of paper titled "Bank Structure and the Public Interest in Woodstock project, report on bank disclosure data prepared by Marilyn Loans made on residential property in Chicago and outside Chicago__ Qualified bidding banks ranked by assets__ Investments of selected neighborhood banks in their home office area. Downtown banks' investments in selected Chicago neighborhoods: 134 329 113 CHARTS AND TABLES Buyer's perspective-Rate of return comparison, conventional mortgage City of Chicago: Census tract/community area street address coding guide_ Conventional home mortgages and home improvement loans redlined Demolition/new construction, 1971-1974_. Page 367 311 Five racial zones- 267 HUD single family inventory, 1975_-. 310 Comparison of closing costs on home mortgages___. Percent of population on public assistance (1971-1975). Conventional house mortgages and home improvement loans-redlined 309 573 neighborhoods v. nonredlined neighborhoods___. 563 Conventional house mortgage loans issued in Chicago, 1975-- 205 Expected revenue, expense, loss, and reserve accumulation for a 10-year 615 131 Federal Reserve System_. 120 FHA insured house mortgage loans endorsed in Chicago, 1975_. 204 Home loan applications and denial rates by nine major Chicago savings associations 595 Investments of Continental Illinois Bank in selected Chicago neighborhoods 321 Investments of First National Bank of Chicago in selected Chicago neighborhoods Investments of selected neighborhood banks in their home office area.. Lending discrimination, a comparison of neighborhood services in cities throughout the Nation___. 323 325 424 Mortgage application and disposition report for 12 Boston savings banks__ 566 495 Mortgage characteristics for single-family homes sold in Chicago by reporting lenders, 1975___ Statement of credit denial, termination, or change_. Summary of mortgage applications at nine Chicago-based institutions. Survey questionnaire developed by Somerville United Neighborhoods__.. 478 593 127 HOME MORTGAGE DISCLOSURE AND EQUAL CREDIT OPPORTUNITY TUESDAY, NOVEMBER 23, 1976 U.S. SENATE, COMMITTEE ON BANKING, HOUSING AND URBAN AFFAIRS, The committee met at 10 a.m., in room 5302, Dirksen Senate Office Building, Senator William Proxmire, chairman of the committee, presiding. Present: Senators Proxmire and Garn. The CHAIRMAN. The committee will come to order. This morning we are conducting oversight hearings on the Home Mortgage Disclosure Act and the Equal Credit Opportunity Act. These two measures are closely related, since taken together they carry out a public policy against discrimination in mortgage lending-discrimination on racial, sex, or ethnic grounds as well as arbitrary discrimination against older urban neighborhoods, which must survive if cities are to be saved. These two laws not only indicate public policy; perhaps more importantly, they provide a mechanism for the enforcement of that policy, and for information on lending patterns, which will show whether a particular financial institution discriminates. The Equal Credit Opportunity Act, of course, prohibits other forms of lending discrimination besides home mortgage loans. However, this morning's hearing will be limited to a discussion of discrimination in mortgage lending and the policies that exist to counteract it. I view these two statutes as complementary. Minority loan applicants often suffer double discrimination. They may be discriminated against because of race. but more subtly because of where they live. Most minorities reside in minority neighborhoods. The lender may be reluctant to lend in a so-called declining neighborhood-and that has the effect of discriminating against the people who want to buy homes there, who often turn out to be black. The Justice Department recently filed a landmark suit against the professional appraisal societies, alleging that their theories and textbooks illegally assert that minorities lower property values. In turn, lenders may base their loan decisions on those questionable appraisals. Of course, it is not only minority families who suffer, but also the longstanding public policy goal of integrated housing. If lenders are reluctant to lend where they fear minorities are likely to move in, that fact alone devalues integrated neighborhoods in the eyes of white families who otherwise might find integration acceptable. And it thereby perpetuates the dual system of segregated housing. It also punishes white residents of older neighborhoods, whose only sin is that they live in neighborhoods where minorities are beginning to "infiltrate," as the appraisal textbooks quaintly put it. With the Equal Credit Opportunity Act and the Home Mortgage Disclosure Act, we finally have the tools to reverse these patterns. The purpose of today's hearing is to determine whether the regulators are using them. I believe it is necessary for examiners to look closely at both the racial composition of a financial institution's loan applications and the loans made, as well as the neighborhood distribution of loans. A lender might be avoiding minority applicants or minority neighborhoods or simply older neighborhoods or all three. It has long been an accepted doctrine of civil rights enforcement that the proof of the pudding is the result. This the so-called effects test which the Supreme Court upheld. When all was said and done, were any minorities actually hired, or lodged or educated, or allowed to purchase homes, or lent money? And if not, why not? The last remaining area of civil rights enforcement where it is impossible to find the answer is in fair lending, even though every major civil rights group has petitioned for racial data collection under the 1968 Civil Rights Act, even though this has been urged by HUD, the Justice Department, the Civil Rights Commission, and a unanimous report last year by this committee. Now, at last, in its latest draft regulations, the Federal Reserve Roard includes regulations requiring simple racial notation and recordkeeping under the authority of the equal credit opportunity amendments. This is welcome and long overdue. We had originally intended to devote this morning solely to hear from the regulatory officials. However, the committee is also hearing from several public witnesses who were instrumental in the passage of the Mortgage Disclosure Act to determine how they are making use of the data that was made public for the first time September 30. If other public witnesses wish to be heard, we will schedule a second day. Gentlemen, I have seen the Jackson statement. It's a very helpful statement and it's well documented to the questions which we wrote you, Governor Jackson. I went over this last night. It's a fine statement. I haven't seen the statement of Mr. Marston of the Federal Home Loan Bank Board as yet. Apparently it came in this morning. Was it available before that? Mr. MARSTON. I thought we brought it up on Friday night. Mr. MARSTON. I signed it on Friday afternoon and we brought it up here on Friday night. The CHAIRMAN. All right. Let's go right ahead then with Mr. Jackson. As I say, we have two other panels. We would appreciate it if you could make this as concise as possible. Go right ahead. STATEMENT OF PHILIP JACKSON, MEMBER, BOARD OF GOVERNORS, FEDERAL RESERVE SYSTEM Mr. JACKSON. Thank you, Mr. Chairman. I believe that my state |