Federal housing regulators say a proposed $7.5 million study will help them crack down on mortgage lenders, landlords and others who discriminate against minorities in housing.

The Department of Housing and Urban Development will commission the study which will search for "patterns of discrimination" in the selling and renting houses and apartments.

"We have a lot of anecdotes and a lot of complaints but we do not have a good sense of the institutional discrimination that exists," Housing Secretary Andrew Cuomo said. "This audit will help us give all American families the opportunity to exercise their legal right to move into any neighborhood and any home they can afford."

The "study" will involve people claiming falsely to be would-be buyers or renters who will report on the reception they receive from real estate brokers, landlords and mortgage lenders. The people doing the testing both men and women will be from a wide number of racial and ethnic groups.

While the mortgage industry admits there are always isolated cases of discrimination, those are the exception, not the rule. In fact, they say, the industry has made great strides to reach out to minorities.

Sharolyn Rosier, a spokeswoman for the Mortgage Bankers Association of America, said MBAA's research of data gathered under the Home Mortgage Disclosure Act showed that between 1993 and 1997, the number of loans funded to black applicants alone has grown 58.4%

A spokesman for the American Bankers Association said they aggressively seek out minority applicants. In fact, many major institutions have adopted a strategy of reviewing once rejected applications to determine if computer credit models were too inflexible.

Cuomo said his department will take bids from nonpartisan, independent research organizations with experience in scientific sampling to conduct the audit that will survey all regions of the country, communities of varying populations in urban, suburban and rural areas.

"The disparity in home ownership is still very great," Cuomo said, even though Americans' home ownership this year hit an all-time high of 67 percent.

He cited home ownership rates of 72.5 percent for whites compared with 45 percent for blacks and 44 percent for Hispanics, which critics in the industry say are not necessarily indicative of discrimination, but income levels.

Home mortgage denial rates stand at 26 percent for whites and 53 percent for black applicants, he said, with differences among the groups remaining the same even after income levels are taken into account.

However, that does not take into account issues like credit history, a key factor in mortgage decisions.

Published: November 19, 1998

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