EAST PALO ALTO: Home loans harder to get in EPA

Latinos score better than blacks in getting mortgages

by Don Kazak

It's what some community leaders have been saying for years: It's harder to get a home loan in East Palo Alto than elsewhere. But it's easier in East Palo Alto if you're Latino than if you're black.

According to data collected and prepared by a federal Housing and Urban Development official on loan to the city, 59 percent of East Palo Alto Latinos who applied for home loans in 1997 had their applications approved, while only 43 percent of blacks had their loans approved.

Overall, "there's a disproportionate rate of rejection for East Palo Alto residents," said Vice Mayor Sharifa Wilson. "There's a tremendous disparity between here and elsewhere."

"The analysis demonstrates that applicants for home loans in East Palo Alto are substantially more likely to be denied loans than applicants in the adjacent Willows area of Menlo Park, as well as applicants throughout the region," Carol Lamont, the HUD official, said in her report to the city.

"The ... data indicates that blacks and Hispanic conventional-loan applicants at every income level are more likely to be denied home loans than white loan applicants, both in this area and nationwide," Lamont wrote.

The most striking part of the data is the comparison between loan acceptance rates in East Palo Alto and the Willows neighborhood: East Palo Alto residents were almost twice as likely to be rejected for home purchase loans, four times as likely to be rejected for refinance loans and more than five times as likely to be denied home improvement loans.

"Some population groups are not being treated fairly by some lending institutions," Wilson said.

The financial data was compiled through the 1997 federal Home Mortgage Disclosure Act.

For a city that is trying to increase housing opportunities for its residents--more than 300 new units will be built as part of the Ravenswood 101 Retail Center redevelopment project--the news about high home loan rejection rates for city residents was dismaying.

"We can create all the housing opportunities we can, but if people can't get loans, it won't make much difference," Wilson said.

The city, meanwhile, has tried to interest a bank in opening a branch in East Palo Alto. The city in May asked a number of lending institutions to submit detailed information on their home loan and other banking practices, and three or four have done so, Wilson said.

Both the city and other public agencies, including the Ravenswood City School District and East Palo Alto Sanitary District, have said they will deposit funds in a bank willing to locate in East Palo Alto.

California Bank & Trust has expressed a strong interest in the city, to the point of trying to rent the building the city has leased for its Planning Department. The San Diego-based bank is also one of four that submitted data for the city to evaluate in its search for a lending institution where it can do business.

"We're working with the city to try to identity and locate (a site)," said Jeff Cheung, California Bank's division manager for Northern California. "We remain dedicated to opening up a full-service bank in the city."

The bank held a consumers fair, complete with refreshments and door prizes, Aug. 7 at Faith Missionary Baptist Church on Runnymede Street. About 80 people showed up and received information on home loans and other banking services.

The bank has done business in the city, including real estate loans for the Faith Missionary Baptist Church, 3 Brothers Tacos and the Jones Mortuary. It also has made donations to several programs and agencies, including the Ecumenical Hunger Program, the YMCA building project and the Hagar Women's Center, among others.

"Not having bricks and mortar hasn't deterred us from serving the community there," Cheung said. "We see a real dynamic to the community."

The City Council will discuss the bank evaluations at a meeting in September or October.

Despite California Bank's strong interest in East Palo Alto, the city will proceed with its evaluation of the lending institutions that submitted data.

"The overall goal of the process is for the city to identify a place to put our funds," Wilson said.

"I'm happy that they want to come here," Wilson said of California Bank. "We recognize the business potential for any bank here in this community. Our interest is in a bank that will make loans to the community."

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