Greenlining of America

Mortgage money, like the middle class, has long been moving out of the cities and into the suburbs, where houses are newer, incomes higher and lending risks lower. Abetting this migration is a decades-old practice called "redlining," by which lending institutions map older city districts off limits for loans, mortgages and insurance. Would-be property buyers in redlined territory are denied loans regardless of their income or credit rating, and older city neighbor hoods quickly turn into newer slums.

Now a spirited fight against redlining is mounting across the U.S. by the residents of declining neighborhoods. Their tactic: to make investments in the inner city financially attractive to lenders once again, a process that community groups call "greenlining."

On Milwaukee's slightly shabby West Side, some 90 neighborhood clubs, schools and religious organizations recently formed the West Side Action Coalition, solicited pledges for $1.25 million, then offered to deposit the money in two friendly savings and loan companies; the S & Ls have promised to provide mortgages to West Side borrowers. In Minneapolis-St. Paul, giant Midwest Federal Savings & Loan Association, responding to similar appeals, has agreed to increase its central-city loans from $19 million to $85 million this year. In Boston last month, citizen groups and local banks formed Neighborhood Housing Services, Inc. to secure loans for rehabilitating houses in two blue-collar sections of Dorchester and Roxbury.

Greenlining's greatest success so far has been achieved in Chicago's South Shore area, onetime haven of the city's white elite, now home for a black mostly working-class population. After losing $36 million in deposits within five years, the South Shore National Bank was considering relocating its headquarters -- and assets -- outside the community.

With financial support from private foundations, the Episcopal Church and United Church of Christ, Businessman Ronald Grzywinski, 38, bought control of the bank last August and promised to use its assets to salvage declining neighborhoods. Grzywinski and Bank President Milton Davis, 40, have lengthened the bank's hours, added more employees to prevent long lines at tellers' windows, and raised interest rates on savings accounts. This quarter, the bank will show its first gain in six years, and has an nounced plans for a development corpo ration to help save the decaying South Shore.

Jumping On. Public officials have begun jumping on the greenlining band wagon too. With the backing of Illinois Governor Dan Walker and Chicago Mayor Richard Daley, the Illinois state housing development authority last month announced that it will lend $20 million to state savings and loan institutions for distribution in city neighborhoods. Wisconsin Governor Patrick J. Lucey has written to lenders in Milwaukee County condemning redlining. The Federal Home Loan Bank Board, over seer of all federally chartered savings and loan associations, recently outlawed any geographic distribution of loans that discriminates against minority groups.

The greenliners have a long way to go. Though banks and other lenders mostly deny that redlining still exists, a recent federal survey indicates other wise. Government investigators found that savings and loans collected $110 million in deposits from residents of two middle-class Chicago neighborhoods last year but disbursed less than $3 million in mortgage money back into those localities; most of the money was loaned to suburban borrowers, often at interest rates far lower than those paid by city home buyers. Since federal strictures against redlining have proved all but unenforceable in the past, the most vigorous fight against the practice doubtless will be waged on the local level for some time to come.

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