EQUITY SOUGHT IN LENDING : DEBATE CONTINUES OVER FINDINGS OF RACE-BIAS STUDY.

Byline: Peter Passell The New York Times

These statistics don't lie: African-American and Latino home buyers have a harder time getting mortgages.

But why? If lenders discriminate by race, it is up to bank regulators and the Justice Department to enforce anti-bias laws. If, however, minorities are less likely to obtain mortgages mostly because they are more likely to suffer from poverty, the cure - allocating credit by skin color - is arguably worse than the disease. So thoughtful policy-makers were delighted when the Federal Reserve Bank of Boston set out in 1990 to answer the question using sophisticated statistical methods.

But four years after the 1992 release of the Boston Fed's findings - which concluded that racial discrimination was still widespread in the banking industry - otherwise mild-mannered academic experts have gotten into mudslinging matches over the implications of the research. Detractors attack it as defective in its methodology and tainted by ideological preconceptions. Supporters dismiss their concerns as overblown and wrongheaded.

Meantime, the publication of the full study in March in the American Economic Review, the flagship journal of the American Economic Association, seems to have escalated the rhetoric.

``I am extremely worried that economics is becoming like other social sciences - not very scientific,'' said Anthony Yezer, an economist at George Washington University and a Boston Fed critic.

The study has had an enormous impact on the banking industry. The Justice Department and the Massachusetts attorney general began investigations of lending discrimination in the Boston area shortly after its dissemination.

In December 1993, for example, the Justice Department settled a lending-discrimination case against Shawmut National Corp., then New England's third-largest banking institution, after it agreed to take steps to prevent discrimination and pay at least $960,000 to African-American and Latino applicants who were denied loans.

And the Clinton administration intensified not-so-friendly efforts to persuade lenders to serve minorities. In one celebrated case, the Justice Department forced a suburban Washington bank that had few African-American mortgage applicants to open an office in an African-American neighborhood.

Flawed or not, the Boston Fed's investigation had a noble purpose: leveling the mortgage playing field for minorities. Racial discrimination has been a fixture of the American housing market since Colonial times, and continues in the 1990s despite state and federal fair-lending laws.

It takes many forms, from ``redlining'' - the refusal of lending institutions to make loans to residents of deteriorating neighborhoods - to charging minorities higher interest rates and fees.

Newsday recently reported that its examination of almost 100,000 mortgage-loan applications on Long Island showed African-Americans had been rejected almost three times as often as whites, even when they had the same income.