FIGHT BACK!  BY DAVID HOROWITZ

Quicker Home Loans
        
        Applying for a home-mortgage loan may soon be as quick  and easy as getting a car loan. 
And that would certainly be  an improvement. Right now, getting a home loan involves piles  of 
paperwork and may take as long as six weeks to be  approved. And if the loan is turned down, 
the buyer must  start all over again with another lender. But if car dealers  can clear a loan in a 
matter of minutes, why can't banks?
        The answer is, they can. A few can, at least. Several  banks in California are now 
experimenting with fast-track  home loans by computer. The basic application and financial  
disclosure is still done by hand. But as soon as the loan  officer enters that information on a 
laptop computer, the  process goes into high speed.
        The data goes from the bank's computer by modem to the  Federal Home Loan Mortgage 
Corporation (Freddie Mac) in  Virginia. Freddie Mac then calls up the borrower's credit  history, 
compares it with the information on the application  and assigns that borrower a credit score. 
Within a few  minutes, Freddie Mac's computer comes back to the bank with  the score, and the 
loan officer makes the final decision.
        Less time and less paperwork means lower costs for  mortgage lenders -- $500 to $1,000 on 
the average. It remains  to be seen if the banks will pass those savings on to their  customers in 
lower loan fees. For the moment, the main  advantage seems to be time saved clearing home 
loans.
        About half the loan applications being run through  Freddie Mac right now are coming back 
approved. The banks  hope that will go up to 75 percent when the system becomes  fully 
operational some time next year. ***
        The Clinton Administration is also pressing federal  agencies that regulate banks and 
savings and loans to  overhaul the Community Reinvestment Act of 1977. That law was  
supposed to make more loans available to low income and  minority borrowers. But critics say it's 
generated more  paperwork than loans over the past 17 years.
        When bank regulators drew up their first proposal last  December, they were inundated with 
more than 6,700 letters  from lenders pleading for more flexibility in meeting the re- quirements of 
the law. The revised version meets many of  their objections, but has also drawn fire from both 
banks and  community development groups.
        While some bankers like the proposed rules, others  complain that it will actually increase 
reporting and paper- work, especially for larger lending institutions. At the same  time, consumer 
advocates say that by loosening regulations,  the government sold out to the lenders and made it 
easier for  them to avoid providing full financial services to poorer  communities.
        The revisions in the law are mostly technical. They  would change the way regulators 
measure lenders' compliance  with the Community Reinvestment Act. The real test will come  
after July 1 of next year, when the new rules are scheduled  to take effect. Then we'll see if 
banks follow through with  their promise to improve financial services and loans in  inner city 
neighborhoods.
        If you have any questions or comments, please write to  David Horowitz in the Consumer 
Forum+ (go FIGHTBACK). COPYRIGHT 1994 CREATORS SYNDICATE, INC.