As the credit spigot dried up in 2008, blacks and Hispanics were more likely to be denied mortgage loans than whites, an Observer analysis of the latest national mortgage data found.

And the rejection gap is growing between whites and minorities, causing some community activists to worry about recurring discrimination in lending.

Nearly one out of two African Americans who sought to buy a single-family home or refinance a loan were denied, compared with about one in four for whites, according to the analysis of top U.S. lenders. Hispanic loan applications were denied nearly as often as those submitted by blacks.

Overall, the country's 10 biggest lenders, including Charlotte's big banks, denied nearly one out of every three applications — the highest rate in the past five years — as the financial crisis erupted. The denial rate was higher for refinancings than for home-purchase loans, as homeowners struggled to get loans with better terms amid rising economic woes and falling housing prices.

A key reason for the latest spike in denial rates, experts suggest, is that lenders disproportionately peddled high-interest rate subprime loans to blacks and Hispanics. Now that market is drying up, eliminating a once-easy source of credit. And those who had unaffordable loans are having a tough time refinancing in the recession.

"The role of race continues to play out in our society" said Peter Skillern, executive director of the Community Reinvestment Association of North Carolina. "Credit is hard to get for everyone. It's disproportionately hard to get if you're African American."

Banks say race is not a factor when they make loans. Discrimination in lending is illegal. "Obviously, denials based on race are unacceptable," said Paul Leonard, vice president for government affairs with the Housing Policy Council, which represents big mortgage lenders.

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