Magazine article Mortgage Banking

Favorable HMDA Data Quell Critics Somewhat

Magazine article Mortgage Banking

Favorable HMDA Data Quell Critics Somewhat

Article excerpt

MORTGAGE LENDERS SHOULD REMAIN ON guard and ready to grapple with legal, regulatory and public-relations fallout following the release of the 2004 Home Mortgage Disclosure Act (HMDA) data. However, the generally industry-favorable data have helped to shift the burden of proof, at least somewhat, from mortgage lenders and onto the consumer groups and government regulators, some experts concluded.

While the HMDA data noted a "sizable narrowing" in unexplainable differences in the incidence of high-cost lending between minority and non-minority borrowers, the problem for the industry remains one of perception in the eyes of the public, according to a panel of experts assembled at Wayne, Pennsylvania-based GHR Systems' Annual Client Conference in Colorado Springs, Colorado.

Prior to the release of the HMDA data by the Federal Financial Institutions Examination Council (FFIEC) and a companion analysis by the Federal Reserve Board, consumer advocacy groups had fully expected the Fed to declare evidence of discrimination in the mortgage market, said Rodrigo Alba, vice president of federal and regulatory affairs, ACC Capital Holdings, Washington, D.C.

"The Fed came out and never mentioned that there is any widespread proof or widespread evidence of [lending] discrimination," said Alba. "As a matter of fact, they said most of the disparities can be explained."

New details collected for the first time in the 2004 HMDA data included information related to loan pricing; indication of whether a loan or application was related to manufactured housing; whether a loan was secured by a first or subordinate lien or was unsecured; as well as a more specific classification of applicants by ethnicity and race (see Mortgage Banking, October 2005, p. 10).

At the individual lender level, the Fed researchers found about 2 percent of the 8,853 lending institutions covered by HMDA throughout the country exhibited a "statistically significant difference" in the incidence of higher-priced loans between black and Hispanic borrowers and non-Hispanic white borrowers. …

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