Publication Date

October 2014

Author(s)

Janneke Ratcliffe

Client/Funder

Consumer Financial Protection Bureau

Financial regulatory reform provisions for HMDA hold promise if several key principles are observed.

In the 13 years that the center has studied how mortgage markets affect lower income and minority households, the Home Mortgage Disclosure Act (HMDA)  has been vital. For example, we have used it to identify disparities in incidence of high priced lending across borrowers, neighborhoods, and regulatory environments.

The ability to distinguish lender and neighborhood has been key to our work in comparing Community Reinvestment Act lending with that of the overall market. Still, HMDA left many critical questions unanswered, and we see much promise in financial regulatory reform provisions for HMDA. Financial regulatory reform provisions for HMDA hold promise if several key principles are observed.

Seven key recommendations for the Federal Reserve to consider:

  • Preserve unique HMDA attributes that are critical to its core purposes; namely, that the data is public, disaggregated, covers applications as well as loans made, covers all loans (not just a sample) and is specific to geography and lender.
  • Expand data collection to add fields that are overdue, such as credit score and value — two factors most relied upon to assess risk and make loan decisions.
  • Standardize data definitions and reporting requirements across institutions and regulators to reduce the cost of compliance and improve the ease of data use.
  • Make HMDA data easier to use by developing an interactive user-interface for those without advanced data management capacity.
  • Ensure borrower privacy is preserved by providing aggregated tables for public access, using statistical conventions to present loan-level data in a form that protects individual borrower information, and make fuller data available under carefully controlled conditions.
  • Make loans traceable through a proposed universal loan identification variable to facilitate tracing of loan performance through the primary and secondary mortgage markets.
  • Institutionalize the reporting process, for example, with a timetable and advisory committee, to ensure the right information is available when needed to spot trends and potential problems with the housing finance system.