Financial Update (Fourth Quarter 2005)



FEATURES

 Jack Guynn on
 Economic Growth,
 Hurricanes

 Payment Services
 Withstand Katrina’s
 Might

 Pat Barron on the
 Need to Improve
 Payment Systems

 Directo a México
 Promotes FedACH

 Webcast
 Introduces New
 Bank Secrecy
 Act Manual

 Credit Cards’
 Benefits Outweigh
 Identity Theft
 Risks

 Go Direct Campaign
 Encourages Direct
 Deposit

 New HMDA
 Data Include
 Loan Pricing

 Redesigned $10 Bill
 to Debut in ’06

 Conference
 Explores Latin
 American Bank
 Reform

 Final CRA Rules
 Take Effect

 Revisions Proposed
 to ATM Fee
 Disclosure

DEPARTMENTS

 Data Bank

 Circular Letters

STAFF

SUBSCRIBE ONLINE

Loan Pricing Included in New HMDA Data for the First Time

The Federal Financial Institutions Examinations Council (FFIEC) released new Home Mortgage Disclosure Act (HMDA) data on Sept. 13 that include loan pricing information. Collected for the first time in 2004, the new information indicates whether a loan or application relates to manufactured housing and whether a loan is secured by a first or subordinate lien or is unsecured.

Related
FFIEC press release
Ordering HMDA data

Banking agencies can use the data to advance enforcement of consumer protection and antidiscrimination laws and to increase the efficiency of the mortgage market. The data can also help determine whether abuse or discrimination exists in the higher-priced mortgage market, a segment that has grown considerably in recent years as new types of lending tools have been developed. HMDA’s new data reveal that the proportion of loans with higher prices varies by loan product, lender, geographic market, race, and ethnicity.

The data can also help determine whether abuse or discrimination exists in the higher-priced mortgage market.

Sound conclusions about a financial institution’s lending practices should not be based solely on HMDA data, according to the FFIEC. The data do not include, for example, a borrower’s credit history and debt-to-income ratio, which are important determinants of credit risk. But the data should be useful as a screening tool for identifying institutions that warrant a closer examination.

Cover