HMDA Data to Include New Home Loan Price Information
New pricing information on home loans will be available in the Home Mortgage Disclosure Act (HMDA) data to be released in early fall 2005. The HMDA data, published by the Federal Financial Institutions Examination Council, are part of the evaluation of lender compliance with antidiscrimination and other consumer protection laws.
Why add new data?
In the past decade, the higher-priced mortgage market has grown considerably. While affording some consumers greater access to home mortgage credit, this development has raised concerns that some consumers could lack the information needed to obtain the best rates or identify unfair or deceptive practices.
What do the new data include?
The new mortgage rate information generally consists of the adjusted annual percentage rate for higher-priced loans with rates that exceed certain thresholds set by the Federal Reserve Board. For first-lien loans, the threshold is 3 percentage points above the Treasury security of comparable maturity and, for second-lien loans, 5 percentage points above the Treasury security of comparable maturity. Lenders will also make special note when a loan exceeds the price triggers or fee triggers of the Home Ownership and Equity Protection Act.
What do the new data not include?
Under the new HMDA rules, lenders are not required to report the price of unsecured home improvement loans, assumptions, home-equity lines of credit, and loans that they purchase from other lenders. The data also do not include determinants of credit risk that may explain higher-priced loans.
How will the new data be used?
The new loan information is intended to strengthen enforcement of consumer protection and antidiscrimination laws and improve mortgage market efficiency. Federal regulatory agencies and other agencies can use loan price data and other HMDA data as a screening tool to identify aspects of the higher-price mortgage market that warrant a closer look to determine whether abuse or discrimination exists. Also, lenders, community groups, government agencies, and others can use the information to identify opportunities for private or public investments.