Study Shows Discrimination Widespread

Racial discrimination in the urban mortgage market of New York is more widespread than many have believed, according to Robert Schafer, associate professor of City Planning for the Harvard-MIT Joint Center for Urban Studies.

In a study released Thursday, Schafer said race is a major consideration in mortgage lending in many areas of the state. He said the likelihood of mortgage denial is twice as great for blacks as whites.

Schafer studied five areas: New York City and Nassau and Suffolk countries. Albany-Schenectady-Troy, Buffalo, Rochester and Syracuse. Only data from the Albany-Schenectady-Troy area contradicted allegations of discrimination.

"Nationally--as in New York State, recent discussion about mortgage lending has focused solely on geographic discrimination." Schafer said Thursday. "This concern is somewhat misdirected since our findings indicate that individuals, more than neighborhoods, are the object of discrimination."

Schafer also said New York's usury laws which set the mortgage lending rate below the market interest rate hurt the people they are supposed to help--the "borrowers of limited means." The state is losing up to $2.4 billion that would have been invested in the state by banks if the interest rate had been higher. Usury laws decrease the amount of money available to lower-income borrowers and help corporate borrowers and purchasers of multi-family and other real estate.

The Savings Bank Association of New York State funded the study in response to allegations of discrimination in the association and as an investigation of the effects of usury laws on it.

The study states its goal is to "provide a factual basis upon which the public and private sectors may take appropriate action."

The study suggests improving the mortgage market by setting the usury rate at the market lending rate, providing state subsidies for lower interest rates, publishing mortgage terms and lending criteria for all banks, involving the community in the loan process, and strengthening anti-discrimination laws and the use of affirmative action program by banks.

"Under Advisement"

A spokesman for the New York State attorney general, Louis J. Lefkowitz, said yesterday Lefkowitz was taking the study under advisement.

Schafer said, "Clearly we must increase our efforts to ensure equal access of all races to the home-buying market."