Housing and Urban Development Secretary Patricia Harris this week chided bankers for not making more FHA-insured loans.

She told the National Conference on Real Estate Finance of the American Bankers Associations that FHA loans figured in a decreasing share of total mortgages closed by commercial banks, dropping from 20 percent in 1970 to 2 percent last year.

This came as commercial banks were pumping an increasing amount of money into the mortgage market, although FHA loans accounted for a declining share of that market, dropping from 25 percent in 1970 to 8 percent in 1977. (FHA loans often are made on older properties to low-income families living in cities; it is administration policy to exhort lenders to increase inner-city residential loans.

Harris called the figures "disheartening." She recognized that many bankers are reluctant to make FHA loans because of red tape and processing delays. The secretary then outlined the steps HUD has taken to streamline its field operations.

"Our field offices now complete the FHA reviews for over 90 percent of the loans processed within three days for initial endorsement and within five days for final endorsement," she added.

"Nearly instantaneous" FHA insurance could become available, she continued, if lenders were willing to co-insure at least 10 percent of the credit risk.

Citing an editorial in "The American Banker" urging more FHA loans for commercial and industrial properties in declining regions "if they could provide employment," Harris outlined ways in which banks can play a vital role in urban revitalization. These included buying inner-city loans made by other lenders to expand their loan ability, warehousing loans by other lenders in anticipation of resale to the Government National Mortgage Association or the private market, and assembling pools of mortgages and issuing Ginnie Mae-guaranteed, mortgage backed securities. The secondary mortgage market is the theme of this year's conference.

Though his remarks preceded hers by several hours, ABA President A.A. Milligan opened the conference with a jibe at critics who say banks are not doing enough in housing. After cataloguing impressive gains in financing for construction loans, mobile homes, home improvement and consumer loans, Milligan said it should be remembered that banks are full-service institutions. "And as such, we bankers are obligated to meet all the financial needs of our communities," he said.

Banks' participation in schools, stores, municipal services and jobs is just as important part of a total living environment as financing housing, he declared.