By Rajeev DaRolia anD
DaviD M. skanDeRson, Ph.D.
Impact
of the
Mortgage
Meltdown
on HMDA
Data
HOME MORTGAGE DISCLOSURE ACT (HMDA) data provides an interesting lens through which to view the “mortgage meltdown” and its impacts on the demo- graphics of mortgage lending. 1 The data also provides clues about the future focus
of examination and enforcement activity, as well as about areas of possible reputation and
litigation risk. Our analysis of the 2008 HMDA data suggests that regulatory attention to
underwriting may increase, and that fairness in Federal Housing Administration (FHA) and
Veterans Administration (VA) lending is likely to receive greater scrutiny.
A key public policy motivation behind HMDA data reporting requirements—and their 2004 expansion to include
pricing—was to increase market transparency with respect
to credit availability and equal credit opportunity, in addition
to providing regulators a tool for monitoring and enforcement. However, we have learned over the past few years that
a variety of broad market factors can cause large swings in
fair lending performance measures that have little to do with
the fairness of mortgage lending. 2 Some recent factors that
have influenced HMDA data include changes in short-term
interest rates in relation to long-term rates (the yield curve)
market credit risk and liquidity risk the availability and cost
of private mortgage insurance relative to government insur-
ance or guarantees lender credit standards
In this article, we provide some insights into major trends
in the HMDA data, both in the aggregate and by state, and in
terms of differences by racial, ethnic, and income group. These
statistics should help readers benchmark where their institu-
tions stand in relation to the overall market. We also suggest
what the data might indicate about the direction of regulatory
attention, which fair lending compliance professionals should
consider in focusing their monitoring and analysis efforts.
