WEDNESDAY, FEBRUARY 11, 1976 T U C S O N D A I L Y C I T I Z E N Declining neighborhoods affected Mortgage 'squeeze play' - not bias - blamed PAGE 13 By FRANK ALLEN Citizen Business Editor Redlining does not exist in Tucson, but local lending institutions are caught in a "regulatory squeeze play" that sometimes makes their loan policies appear discriminatory, says the president of Home Federal Savings Loan Association. Redlining is defined generally as the practice of refusing to make home mortgage loans in declining neighborhoods. Ted S. Sitterley Jr. said yesterday the Federal Home Loan Bank Board and Federal Savings Loan Insurance Corp. require all savings and loan associations to evaluate neighborhood conditions in making mortgage loan decisions. The Home Federal president told the Tucson Advertising Club that if the neighborhood has a "weakness" -- due to deteriorating properties, unstable employment patterns, inadequate police and fire protection, poor school facilities or other factors -the federal agencies compel the lender to reduce the value of the loan or its length or both. All local savings and loan firms are firmly opposed to discrimination, regardless of geographic or racial considerations, Sitterley maintained. But every association, he said, must follow sound lending practices by ensuring the credit-worthiness of the borrower, the value of the underlying property and the diversification of the loan portfolio to guard against excessive losses. The meaning of the term redlining has shifted since the late 1960s, when casualty insurance companies figurative- ly, if not literally, drew red lines on maps of such riot-torn cities as Detroit and Los Angeles and quit providing fire insurance and other cov- erages, he said. Lenders were drawn automatically into the web of those decisions because federal laws forbid them to make loans in the absence of fire insurance. More recently, the term has been used nationally to suggest the lack 'of mortgage credit available in certain neighborhoods. The assumption has been that lending From 0 to 40 cents Property tax boost? Depends on who talks By LES SCKLANGEN Associated Press Writer PHOENIX -- Will the current session of the Arizona Legislature force an increase in the state's $1.60 property tax rate? The answer depends on who you ask and, second, \Â»ho you believe. Rep. Thomas N. Goodwin, R-Tucson, chairman of the House Appropriations Committee, doesn't bat an eye at the question. "Sure, there will be a tax increase and it probably will be close to 40 cents," Goodwin said. Goodwin, who describes his committee as "12 personnel problems," exempting himself, of course, said it is perilous to predict state spending for the next fiscal year, but he expects it to run at least $20 million over projected income of $803 million. "We can't see the whole picture yet until we know how much we'll spend for Medicaid and other programs," said Goodwin. Sen. Ed Sawyer, D-Safford, chairman of the Senate Appropriations Committee, doesn't see it that way. "We picked our priorities by agreeing with the House on an 8 per cent cost-of-living increase to state employes," said Sawyer. "But that's no reason to say there has to be an increase in the tax rate." Sawyer said the existing pressure on the lax rate was visible last August when the Joint Legislative Budget Committee met and raised the rate by 10 cents. "The Senate argued then that it should have been 25 cents because we could see requests for supplemental funding of $10 million or more, said Sawyer. Still, Sawyer says the line can be held if the budget drafters peel a bit deeper on spending recommendations. Gov. Raul H. Castro's proposed budget called for expenditures of $786 million, balanced against projected income of $800 million. So what's the problem? One is the $20 million pay increase approved by the two appropriations committees for state employes. Since that was not included in the governor's budget, it's overspent by $6 million already. And there are other needs, such as something in the way of the $5.5 million spent this year for school transportation. That isn't in the budget either. i If there has to be a tax increase, the state rate is the least painful to the home owner. Twenty-five cents there could save $1 or more at the local school district level because of the broader base and the heavier assessments on mines, utilities, railroads and other centrally appraised properties. Much of the guesswork will be over when the final budget figure is delivered to the governor's desk at the end of the session. But it will still be up to the joint 18-member legislative committee to set the figure when it meets next August. It will have a fresh set of projections for the year at that time and rising revenues in an upbeat economy could make the hold-the-liners into winners. institutions are contributing deliberately to the decline of mature neighborhoods, Sitterley said. To refute that assumption, he pointed to a pair of national surveys conducted in 1971 by the Federal Home Loan Bank Board and the Urban Leaue. Both surveys identified six distinct stages in the process of neighborhood decline. Both listed "disinvestment" -- a term meaning fewer new mortgage loans available and reduced risk to lenders for those loans still available -as the fifth stage in the process, an effect rather than a cause, Sitterley said. The earlier stages were a decline in the socio-economic status of the neighborhood, a racial or ethnic composition change, weakened real estate market conditions and then "crisis ghetto" conditions, he said. Before disinvestment occurs, conditions already have deteriorated to the extent that more people want to move out of the neighborhood than want to move in, Sitterley explained. He challenged the assumption that laws designed to thwart disinvestment by forcing lenders to make inner city loans would be e f f e c t i v e . 8730 E. BROADWAY 6323 E. 22ND ST. PRICES ALSO GOOD AT 38 E. CONGRESS DOWNTOWN DRUG AND DISCOUNT STORES YOU CAN MAKE 10 FULL CUPS OF DELICIOUS COFFEE IN LESS THAN 5 MINUTES! with MR.C0FFEE AUTOMATIC COFFEE BREWER 99 34 tor people who want good c o f f e e -- f a s t ! Mr. C o f f e e makes rich flavored, restaurant style c o f f e e faster than any other c o f f e e maker. Never b i t t e r , b e c a u s e it's never boiled. Never a mess because f i l t e r s are disposable. 1 cup is all it takes to know why everybody loves coffee Mr. Coffee makes. 100 GENUINE MR. COFFEE M FILTERS REG, 1.19 88 Scientifically designed for M r . C o f f e e . G u a r a n t e e d b a l a n c e d flavor extraction, proper b r e w i n g a c - tion FOUR EXCLUSIVE MR. COFFEE' FEATURES: k "That's treating symptoms, not causes," he said. "Simply throwing money at the problem will not solve it." Sitterley noted that savings and loan associations have been shouldering an increasing share of the home mortgage loan burden nationwide. Last year, for example, loans by savings institutions accounted for about three- fourths of all the home mortgage credit in the country. Meanwhile, other lenders have been abandoning the market. Twenty years ago, life insurance companies underwrote about 25 per cent of all home mortgage loans, but by 1974 their proportion had dropped to less than six per cent, Sitterley said. 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