New HMDA Data Show Decline in Mortgage Lending
Changes in the mortgage industry are evident in the newly released 2007 Home Mortgage Disclosure Act (HMDA) data. The HMDA data, released in September 2008 by the Federal Financial Institutions Examination Council (FFIEC), cover mortgage lending transactions of 8,610 lenders in metropolitan statistical areas throughout the nation.
Overall home mortgage market down
Recent changes to the data allowed comparisons on loan pricing. Differences in the incidence of higher-priced lending (that is, the proportion of loans where the spread between the loan's annual percentage rate and the yield on comparable-maturity Treasury securities exceeds specified thresholds) between racial and ethnic groups continued in 2007, as did differences in denial rates on loan applications. These differences continue to raise concerns about the availability of credit to minority applications.
HMDA data cannot answer all of the questions
Conclusions from the HMDA data alone, therefore, run the risk of being unsound, which in turn may reduce the data's effectiveness in promoting HMDA's objectives, according to the FFIEC. Nevertheless, the HMDA pricing data are a useful screening tool for identifying institutions that warrant further scrutiny.
October 17, 2008