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5 Ways HMDA Data Are Used in Fair Lending Analysis: Your analysis is only as good as the data
Fair lending analysis attempts to use lending transaction data to tell the story of the evenhandedness of underwriting, pricing, and marketing decisions in terms of what happened when, where, why, how, and to whom. Fair lending compliance managers may use HMDA data to quantify fair lending risk in several ways: Disparity Ratios. Comparing decision or…
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5 Ways to Use HMDA Data in a Non-Fair Lending Context
I have always been shocked by the reluctance of lenders to use HMDA data for reasons other than fair lending. Too often, mentioning the four letters, H M D A, causes heartburn among lenders. This is understandable because HMDA is associated with compliance, regulation, race, and lawsuits. HMDA data are a blessing to the mortgage…
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What is a Low Denial Rate Really Telling You?
Here’s an observation worth considering: A low denial rate irrespective of prohibited bases does not in itself ensure that denial disparities by prohibited bases will disappear. In fact, that low denial rate could be a warning that other issues exist, and if the denial rate is low enough, it would be a red flag that…
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3 Reasons to Go Beyond the HMDA Edit Checks before submission
As the year 2021 winds down, it is time to start thinking about ensuring that your HMDA submission is ready to be filed by March 1, 2022. Before the end of this year Compliance Officers, and those ultimately responsible for the HMDA submission signoff, should use this time to make sure that the HMDA data…
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Approaches to Peer Analysis in LendingPatterns™
One of the great features of LendingPatterns™ is that any lender’s diverse lending performance can be analyzed in the context of other lenders in the same market. This is the only way a given lender’s performance can be said to be above or below expectations. Sometimes this is referred to as comparing a lender against…
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Appraisals, collateral denials, and the potential for discrimination
Freddie Mac recently released a study Research Note pdf based on their analysis of appraisal valuations. It’s worth taking a look. The following sentence from the report summarizes the findings: Our preliminary modeling results suggest that even when taking structural and neighborhood characteristics into consideration, a property is more likely to receive an appraisal lower than…
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5 Fair Lending Myths Dispelled
After a long career in mortgage finance and fair lending I’ve attended many panels, workshops, and conferences on fair lending. All too frequently at these events, I hear someone from the audience or even a panelist declare a “fair lending myth.” A fair lending myth is a statement about HMDA, ECOA, and FH Act regulatory…
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Optimize Your HMDA Fair Lending Resources with 6 Key Factors
Optimize Your HMDA Fair Lending Resources with 6 Key Factors Lenders often face the questions, “What resources do I need to manage fair lending?” and “how much should I budget?” The truth is there is no standard answer to these questions regarding effective fair lending analysis. The human, technological, and monetary resources needed to handle…
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What’s the point of fair lending monitoring?
In my experience, there are more lenders who do little to nothing to monitor fair lending than those who actively manage it. Those that do less tend to be independent mortgage companies rather than depository institutions. I believe there are several reasons for this outcome: A) Culture and Traditions: Prior to Dodd-Frank independent mortgage companies…