The Future of Home Mortgage Disclosure Act Data and Implications for Understanding Discrimination
Since 1975, the Home Mortgage Disclosure Act (HMDA) has served as an indispensable tool in identifying possible discriminatory lending patterns and enforcing antidiscrimination statutes. HMDA requires home mortgage lenders to report each loan application for the vast majority of loans, including information about whether the loan was approved or denied and information about the loans and applicants. Those characteristics include, importantly, the race, gender and income of the borrower and the mortgage’s location. The critical element of the HMDA data is that it is publicly available and examined by a wide range of researchers and advocates.
Research using HMDA has documented differential lending outcomes by race and ethnicity, but the ability to make conclusions about the role of race is hindered by a lack of data on key factors in lenders’ decisionmaking, most notably loan-to-property value, overall debt ratios and borrower’s credit score. The Dodd-Frank Act of 2010 recognized the limitations of the current HMDA data collection and mandated these fields and several other loan characteristics be added to the reporting requirements. The availability of this new data will help the field better estimate the how the various factors, including race and ethnicity, influence lending outcomes. However, there are valid concerns that releasing the application data with these expanded fields at the census tract level will violate privacy protections. To implement the Dodd-Frank changes, the Bureau will issue a proposed rule to modify Regulation C, which implements HMDA. This presentation will discuss the new efforts of the CFPB to increase access to the current data, the future trade-offs of which fields to include in the public file, and the implications of potentially restricting access to the full set of data.