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<HTML> <HEAD> <META HTTP-EQUIV="Content-Type" CONTENT="text/html; charset=windows-1252"> <META NAME="keywords" CONTENT="The Color of Money, Pulitzer Prize, Bill Dedman, fair lending, redlining, discrimination, race, mortgages, CRA, HMDA, fair housing, journalism, investigative reporting, reinvestment, community development"> <META NAME="description" CONTENT="Text of The Color of Money, 1989 recipient of the Pulitzer Prize in investigative reporting, a series of articles by Bill Dedman in The Atlanta Journal-Constitution on racial discrimination in mortgage lending."> <TITLE>The Color of Money</TITLE> </HEAD> <BODY TEXT="#000000" LINK="#0000ff" VLINK="#800080" BGCOLOR="#ffffff"> <BASE FONT SIZE=2 FACE="TIMES NEW ROMAN" COLOR="#CC0000"> <I>Go to <A HREF="http://PowerReporting.com/color/82.html">the next article</A> or back to <A HREF="http://PowerReporting.com/color/">the Color of Money index</A> or <A HREF="http://www.PowerReporting.com/">Power Reporting</A></I></P> <p align=left> <img src="http://PowerReporting.com/images/classic.gif" width="85%" height="16" alt="http://PowerReporting.com/images/classic.gif"> </p> <P></P> <h1>The Color of Money</h1> <h4>Editorials and Letters</h4> <P><HR></P> <h2>The legacy of redlining lives on</h2> <P><HR></P> <h3>The Atlanta Journal-Constitution</h3> <h4>Published August 12, 1989, Editorial Page, Page A16</h4> <h4>Copyright 1989, The Atlanta Journal-Constitution</h4> <P></P> <P><HR></P> <P>Give Atlanta's major lending institutions the credit they deserve for starting special home mortgage lending pools for working-class consumers. But don't mistake those initiatives for widespread changes in the policies and practices that have led to racially uneven lending patterns. The banks' efforts to reach metropolitan Atlanta's more affluent blacks amount to chump change.</P> <P>Last year, The Atlanta Journal-Constitution published a series of articles that showed a disheartening gap in the number of home-purchase and home-improvement loans received by white residents and black residents. Whites received five times as many home loans as blacks of the same income. The series was careful to compare neighborhoods of similar homes and rates of growth. The only significant difference was the color of the homeowners.</P> <P>The newspaper series also showed that the banks were neglecting their duty under the Community Reinvestment Act to provide services to lower-income residents. Some banks, for example, wouldn't consider applications for home loans of less than $40,000.</P> <P>Since then, several lenders have gone to work to improve their services to low-and moderate-income residents, mostly through special home mortgage lending pools that target certain geographic areas.</P> <P>Not all the special lending pools have worked as well as their planners had hoped. Many of the consumers they aim to help are poor credit risks, so the banks can't lend them money without jeopardizing their stockholders' interests. But the loan pools are basically a sound idea. They deserve an infusion of public funds so the banks can reach even more working-class would-be homeowners.</P> <P>The lenders have not been nearly as energetic or creative, however, about ensuring that middle-class blacks with good incomes and credit ratings can get home loans to buy or improve houses in predominantly black areas, especially on the Southside. Appraisers still tend to undervalue property, even newly constructed luxury homes, if they happen to be built in black areas. Low-ball estimates on homes mean that would-be buyers can't borrow enough money from the banks to purchase the property.</P> <P>Low estimates also mean that developers who are interested in building on the Southside have trouble getting construction loans. While bankers eagerly provide loans for land speculation on the booming Northside, they hesitate to provide funds for even low-risk ventures on the Southside. The overall result is that the Southside continues to suffer from a lack of commercial investment.</P> <P>City Council President Marvin Arrington started a commendable effort to force the banks to deal fairly with the Southside but he failed to follow through. Mayor Andrew Young hasn't seemed very interested in the issue at all. Their leadership is crucial.</P> <P>Major financial institutions are tradition-bound. They are unlikely to change without consistent pressure. But it need not be harsh. Friendly persuasion should be able to convince lenders that there is money to be made south of Interstate 20.</P> <img src="http://PowerReporting.com/images/classic.gif" width="85%" height="16" alt="http://PowerReporting.com/images/classic.gif"> </p> <I>Go to <A HREF="http://PowerReporting.com/color/82.html">the next article</A> or back to <A HREF="http://PowerReporting.com/color/">the Color of Money index</A> or <A HREF="http://www.PowerReporting.com/">Power Reporting</A></I></P> <p align=left> <img src="http://PowerReporting.com/images/classic.gif" width="85%" height="16" alt="http://PowerReporting.com/images/classic.gif"> </p> <P>Reprinted with permission from The Atlanta Journal and The Atlanta Constitution. Further reproduction, retransmission or distribution of these materials without the prior written consent of The Atlanta Journal and The Atlanta Constitution, and any copyright holder identified in the material's copyright notice, is prohibited.</P> <P></P> <p align=left> <img src="http://PowerReporting.com/images/classic.gif" width="85%" height="16" alt="http://PowerReporting.com/images/classic.gif"> </p> <P></P> <P></P> <P><I>Please send comments and story ideas to Bill Dedman, <A HREF="mailto:Bill@PowerReporting.com">Bill@PowerReporting.com</A></I></P> <P><I>Home page: <A HREF="http://www.PowerReporting.com/">Power Reporting</A></I></P> <P></P> </BODY> </HTML>