The same day the U.S. Department of Housing & Urban Development launched plans for a one-year, $7.5 million probe into discrimination in lending and homebuying, the Mortgage Bankers Association of America launched its own independent research organization designed to improve access to home loans for minorities and low-income people.

The Research Institute for Housing America, backed by the MBAA, is the first national independent research organization devoted to expanding housing and mortgage markets to all Americans. Its executive director will be Stephen Hornburg, currently senior policy director for the Fannie Mae Foundation.

"We need to be armed with the knowledge to deliver housing and mortgage credit to families and individuals who have been locked out of the American dream," said Donald Lange, president of the Mortgage Bankers Association of America. "It's not only good public policy, it's good business."

Lange said the Research Institute for Housing America will be dedicated to objective, credible research on how to increase housing opportunity -- particularly for under-served populations and communities. Through its research and programs, the Institute will generate better understanding of how these markets can be improved, and how public policy can promote greater access to housing and mortgage credit.

The Institute will operate as a virtual think-tank, working in partnership with scholars, advocates, regulators, consumers, community representatives, and industry leaders to produce the best knowledge base on which to base policy development and business practice.

The Institute will also pursue research that:

• Addresses fair lending, fair housing and discrimination in the housing and mortgage markets;
• Expands the markets for housing and mortgage credit;
• Assesses the costs and benefits of homeownership; and
• Analyzes public policy and legal theory concerning housing and mortgage opportunities.

"We have made substantial progress in eliminating barriers to housing choices and homeownership,"Hornburg said. "The Institute will be a catalyst for creating and using new knowledge to expand housing choice and build stronger communities."

Attorney General Janet Reno and Housing Secretary Andrew Cuomo released letters supporting the institute.

"Right now, not everyone is getting a fair deal," Anne Schnare, senior vice president of corporate relations for mortgage company Freddie Mac, said.

A national coalition of community groups released a study last week showing that blacks and Hispanics were rejected for traditional home mortgages at a higher rate than white applicants from 1995 through 1997. The rejection rates for those two minority groups were reported to have risen even as a strong economy, low interest rates and easy terms allowed many families to buy homes for the first time.

While admitting isolated problems, industry critics of the study noted that it did not take into account applicants' income levels or credit records, key elements in mortgage and lending decisions.